Correlation Between Star Bulk and Costamare
Can any of the company-specific risk be diversified away by investing in both Star Bulk and Costamare at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Star Bulk and Costamare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Star Bulk Carriers and Costamare, you can compare the effects of market volatilities on Star Bulk and Costamare and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Star Bulk with a short position of Costamare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Bulk and Costamare.
Diversification Opportunities for Star Bulk and Costamare
Almost no diversification
The 3 months correlation between Star and Costamare is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Star Bulk Carriers and Costamare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costamare and Star Bulk is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Star Bulk Carriers are associated (or correlated) with Costamare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costamare has no effect on the direction of Star Bulk i.e., Star Bulk and Costamare go up and down completely randomly.
Pair Corralation between Star Bulk and Costamare
Given the investment horizon of 90 days Star Bulk Carriers is expected to under-perform the Costamare. But the stock apears to be less risky and, when comparing its historical volatility, Star Bulk Carriers is 1.1 times less risky than Costamare. The stock trades about -0.05 of its potential returns per unit of risk. The Costamare is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,062 in Costamare on November 3, 2024 and sell it today you would earn a total of 104.00 from holding Costamare or generate 9.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Star Bulk Carriers vs. Costamare
Performance |
| Timeline |
| Star Bulk Carriers |
| Costamare |
Star Bulk and Costamare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Star Bulk and Costamare
The main advantage of trading using opposite Star Bulk and Costamare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Bulk position performs unexpectedly, Costamare can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Costamare will offset losses from the drop in Costamare's long position.| Star Bulk vs. Genco Shipping Trading | Star Bulk vs. Diana Shipping | Star Bulk vs. Danaos | Star Bulk vs. Golden Ocean Group |
| Costamare vs. Global Ship Lease | Costamare vs. Navios Maritime Partners | Costamare vs. Genco Shipping Trading | Costamare vs. Danaos |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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