Correlation Between Star Bulk and Global Ship
Can any of the company-specific risk be diversified away by investing in both Star Bulk and Global Ship 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 Global Ship 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 Global Ship Lease, you can compare the effects of market volatilities on Star Bulk and Global Ship 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 Global Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Bulk and Global Ship.
Diversification Opportunities for Star Bulk and Global Ship
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Star and Global is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Star Bulk Carriers and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease 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 Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of Star Bulk i.e., Star Bulk and Global Ship go up and down completely randomly.
Pair Corralation between Star Bulk and Global Ship
Given the investment horizon of 90 days Star Bulk Carriers is expected to generate 0.92 times more return on investment than Global Ship. However, Star Bulk Carriers is 1.09 times less risky than Global Ship. It trades about -0.06 of its potential returns per unit of risk. Global Ship Lease is currently generating about -0.11 per unit of risk. If you would invest 1,920 in Star Bulk Carriers on August 24, 2024 and sell it today you would lose (49.00) from holding Star Bulk Carriers or give up 2.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Star Bulk Carriers vs. Global Ship Lease
Performance |
| Timeline |
| Star Bulk Carriers |
| Global Ship Lease |
Star Bulk and Global Ship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Star Bulk and Global Ship
The main advantage of trading using opposite Star Bulk and Global Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Bulk position performs unexpectedly, Global Ship 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 Global Ship will offset losses from the drop in Global Ship's long position.| Star Bulk vs. Genco Shipping Trading | Star Bulk vs. Diana Shipping | Star Bulk vs. Danaos | Star Bulk vs. Golden Ocean Group |
| Global Ship vs. Costamare | Global Ship vs. Navios Maritime Partners | Global Ship vs. Genco Shipping Trading | Global Ship vs. Star Bulk Carriers |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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