Correlation Between TOP Ships and EuroDry
Can any of the company-specific risk be diversified away by investing in both TOP Ships and EuroDry 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 TOP Ships and EuroDry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOP Ships and EuroDry, you can compare the effects of market volatilities on TOP Ships and EuroDry 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 TOP Ships with a short position of EuroDry. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOP Ships and EuroDry.
Diversification Opportunities for TOP Ships and EuroDry
Very poor diversification
The 3 months correlation between TOP and EuroDry is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding TOP Ships and EuroDry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EuroDry and TOP Ships 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 TOP Ships are associated (or correlated) with EuroDry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EuroDry has no effect on the direction of TOP Ships i.e., TOP Ships and EuroDry go up and down completely randomly.
Pair Corralation between TOP Ships and EuroDry
Given the investment horizon of 90 days TOP Ships is expected to under-perform the EuroDry. In addition to that, TOP Ships is 1.09 times more volatile than EuroDry. It trades about -0.13 of its total potential returns per unit of risk. EuroDry is currently generating about -0.1 per unit of volatility. If you would invest 2,033 in EuroDry on November 9, 2024 and sell it today you would lose (940.00) from holding EuroDry or give up 46.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.25% |
| Values | Daily Returns |
TOP Ships vs. EuroDry
Performance |
| Timeline |
| TOP Ships |
| EuroDry |
TOP Ships and EuroDry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOP Ships and EuroDry
The main advantage of trading using opposite TOP Ships and EuroDry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOP Ships position performs unexpectedly, EuroDry 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 EuroDry will offset losses from the drop in EuroDry's long position.| TOP Ships vs. United Maritime | TOP Ships vs. Globus Maritime | TOP Ships vs. Castor Maritime | TOP Ships 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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| Fundamental Analysis View fundamental data based on most recent published financial statements |