Correlation Between TOP Ships and Safe Bulkers
Can any of the company-specific risk be diversified away by investing in both TOP Ships and Safe Bulkers 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 Safe Bulkers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOP Ships and Safe Bulkers, you can compare the effects of market volatilities on TOP Ships and Safe Bulkers 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 Safe Bulkers. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOP Ships and Safe Bulkers.
Diversification Opportunities for TOP Ships and Safe Bulkers
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TOP and Safe is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding TOP Ships and Safe Bulkers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe Bulkers 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 Safe Bulkers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safe Bulkers has no effect on the direction of TOP Ships i.e., TOP Ships and Safe Bulkers go up and down completely randomly.
Pair Corralation between TOP Ships and Safe Bulkers
Given the investment horizon of 90 days TOP Ships is expected to under-perform the Safe Bulkers. But the stock apears to be less risky and, when comparing its historical volatility, TOP Ships is 1.13 times less risky than Safe Bulkers. The stock trades about -0.38 of its potential returns per unit of risk. The Safe Bulkers is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 345.00 in Safe Bulkers on November 9, 2024 and sell it today you would earn a total of 16.00 from holding Safe Bulkers or generate 4.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOP Ships vs. Safe Bulkers
Performance |
| Timeline |
| TOP Ships |
| Safe Bulkers |
TOP Ships and Safe Bulkers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOP Ships and Safe Bulkers
The main advantage of trading using opposite TOP Ships and Safe Bulkers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOP Ships position performs unexpectedly, Safe Bulkers 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 Safe Bulkers will offset losses from the drop in Safe Bulkers' long position.| TOP Ships vs. United Maritime | TOP Ships vs. Globus Maritime | TOP Ships vs. Castor Maritime | TOP Ships vs. Safe Bulkers |
| Safe Bulkers vs. Global Ship Lease | Safe Bulkers vs. Costamare | Safe Bulkers vs. Navios Maritime Partners | Safe Bulkers vs. Genco Shipping Trading |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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