Correlation Between US Global and Breakwave Dry
Can any of the company-specific risk be diversified away by investing in both US Global and Breakwave Dry 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 US Global and Breakwave Dry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Global Sea and Breakwave Dry Bulk, you can compare the effects of market volatilities on US Global and Breakwave Dry 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 US Global with a short position of Breakwave Dry. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Global and Breakwave Dry.
Diversification Opportunities for US Global and Breakwave Dry
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SEA and Breakwave is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding US Global Sea and Breakwave Dry Bulk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Breakwave Dry Bulk and US Global 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 US Global Sea are associated (or correlated) with Breakwave Dry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Breakwave Dry Bulk has no effect on the direction of US Global i.e., US Global and Breakwave Dry go up and down completely randomly.
Pair Corralation between US Global and Breakwave Dry
Considering the 90-day investment horizon US Global Sea is expected to generate 0.32 times more return on investment than Breakwave Dry. However, US Global Sea is 3.15 times less risky than Breakwave Dry. It trades about 0.05 of its potential returns per unit of risk. Breakwave Dry Bulk is currently generating about 0.0 per unit of risk. If you would invest 1,252 in US Global Sea on September 1, 2024 and sell it today you would earn a total of 317.00 from holding US Global Sea or generate 25.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Global Sea vs. Breakwave Dry Bulk
Performance |
| Timeline |
| US Global Sea |
| Breakwave Dry Bulk |
US Global and Breakwave Dry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Global and Breakwave Dry
The main advantage of trading using opposite US Global and Breakwave Dry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Global position performs unexpectedly, Breakwave Dry 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 Breakwave Dry will offset losses from the drop in Breakwave Dry's long position.The idea behind US Global Sea and Breakwave Dry Bulk pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Breakwave Dry vs. SonicShares Global Shipping | Breakwave Dry vs. KraneShares Global Carbon | Breakwave Dry vs. iPath Series B | Breakwave Dry 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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