Correlation Between Western Bulk and DAmico International
Can any of the company-specific risk be diversified away by investing in both Western Bulk and DAmico International 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 Western Bulk and DAmico International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Bulk Chartering and dAmico International Shipping, you can compare the effects of market volatilities on Western Bulk and DAmico International 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 Western Bulk with a short position of DAmico International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Bulk and DAmico International.
Diversification Opportunities for Western Bulk and DAmico International
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and DAmico is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Western Bulk Chartering and dAmico International Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on dAmico International and Western 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 Western Bulk Chartering are associated (or correlated) with DAmico International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of dAmico International has no effect on the direction of Western Bulk i.e., Western Bulk and DAmico International go up and down completely randomly.
Pair Corralation between Western Bulk and DAmico International
Assuming the 90 days horizon Western Bulk is expected to generate 1.79 times less return on investment than DAmico International. In addition to that, Western Bulk is 2.26 times more volatile than dAmico International Shipping. It trades about 0.01 of its total potential returns per unit of risk. dAmico International Shipping is currently generating about 0.04 per unit of volatility. If you would invest 255.00 in dAmico International Shipping on August 28, 2024 and sell it today you would earn a total of 180.00 from holding dAmico International Shipping or generate 70.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Bulk Chartering vs. dAmico International Shipping
Performance |
| Timeline |
| Western Bulk Chartering |
| dAmico International |
Western Bulk and DAmico International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Bulk and DAmico International
The main advantage of trading using opposite Western Bulk and DAmico International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Bulk position performs unexpectedly, DAmico International 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 DAmico International will offset losses from the drop in DAmico International's long position.| Western Bulk vs. AP Mller | Western Bulk vs. COSCO SHIPPING Holdings | Western Bulk vs. Orient Overseas Limited |
| DAmico International vs. Western Bulk Chartering | DAmico International vs. AP Moeller | DAmico International vs. AP Mller | DAmico International vs. EuroDry |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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