Correlation Between Star Bulk and United Maritime
Can any of the company-specific risk be diversified away by investing in both Star Bulk and United Maritime 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 United Maritime 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 United Maritime, you can compare the effects of market volatilities on Star Bulk and United Maritime 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 United Maritime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Bulk and United Maritime.
Diversification Opportunities for Star Bulk and United Maritime
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Star and United is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Star Bulk Carriers and United Maritime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Maritime 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 United Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Maritime has no effect on the direction of Star Bulk i.e., Star Bulk and United Maritime go up and down completely randomly.
Pair Corralation between Star Bulk and United Maritime
Given the investment horizon of 90 days Star Bulk Carriers is expected to generate 0.77 times more return on investment than United Maritime. However, Star Bulk Carriers is 1.3 times less risky than United Maritime. It trades about -0.04 of its potential returns per unit of risk. United Maritime is currently generating about -0.22 per unit of risk. If you would invest 1,903 in Star Bulk Carriers on August 28, 2024 and sell it today you would lose (38.00) from holding Star Bulk Carriers or give up 2.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Star Bulk Carriers vs. United Maritime
Performance |
| Timeline |
| Star Bulk Carriers |
| United Maritime |
Star Bulk and United Maritime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Star Bulk and United Maritime
The main advantage of trading using opposite Star Bulk and United Maritime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Bulk position performs unexpectedly, United Maritime 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 United Maritime will offset losses from the drop in United Maritime's long position.| Star Bulk vs. Genco Shipping Trading | Star Bulk vs. Diana Shipping | Star Bulk vs. Danaos | Star Bulk vs. Golden Ocean Group |
| United Maritime vs. TOP Ships | United Maritime vs. Globus Maritime | United Maritime vs. Castor Maritime | United Maritime vs. Safe Bulkers |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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