Correlation Between Safe Bulkers and Kirby

Can any of the company-specific risk be diversified away by investing in both Safe Bulkers and Kirby 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 Safe Bulkers and Kirby into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Safe Bulkers and Kirby, you can compare the effects of market volatilities on Safe Bulkers and Kirby 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 Safe Bulkers with a short position of Kirby. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safe Bulkers and Kirby.

Diversification Opportunities for Safe Bulkers and Kirby

0.81

Correlation Coefficient

Safe Bulkers  Kirby

Very poor diversification

The 3 months correlation between Safe and Kirby is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Safe Bulkers and Kirby in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kirby and Safe Bulkers 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 Safe Bulkers are associated (or correlated) with Kirby. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kirby has no effect on the direction of Safe Bulkers i.e., Safe Bulkers and Kirby go up and down completely randomly.

Pair Corralation between Safe Bulkers and Kirby

Assuming the 90 days horizon Safe Bulkers is expected to under-perform the Kirby. But the preferred stock apears to be less risky and, when comparing its historical volatility, Safe Bulkers is 3.38 times less risky than Kirby. The preferred stock trades about -0.05 of its potential returns per unit of risk. The Kirby is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  11,607  in Kirby on March 16, 2024 and sell it today you would earn a total of  262.00  from holding Kirby or generate 2.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	86.36%
Values	Daily Returns

Safe Bulkers  vs.  Kirby

Safe Bulkers

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Safe Bulkers are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Safe Bulkers is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Kirby

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kirby are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Kirby showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Safe Bulkers and Kirby

The main advantage of trading using opposite Safe Bulkers and Kirby positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safe Bulkers position performs unexpectedly, Kirby 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 Kirby will offset losses from the drop in Kirby's long position.

The idea behind Safe Bulkers and Kirby 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.

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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.