Correlation Between Costamare and International Seaways

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

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

Diversification Opportunities for Costamare and International Seaways

0.45

Correlation Coefficient

Costamare  International Seaways

Very weak diversification

The 3 months correlation between Costamare and International is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Costamare and International Seaways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Seaways and Costamare 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 Costamare are associated (or correlated) with International Seaways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Seaways has no effect on the direction of Costamare i.e., Costamare and International Seaways go up and down completely randomly.

Pair Corralation between Costamare and International Seaways

Given the investment horizon of 90 days Costamare is expected to under-perform the International Seaways. In addition to that, Costamare is 1.09 times more volatile than International Seaways. It trades about -0.06 of its total potential returns per unit of risk. International Seaways is currently generating about 0.02 per unit of volatility. If you would invest  5,256  in International Seaways on January 19, 2024 and sell it today you would earn a total of  15.00  from holding International Seaways or generate 0.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Costamare  vs.  International Seaways

Costamare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Costamare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Costamare is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

International Seaways

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in International Seaways are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, International Seaways is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Costamare and International Seaways

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

The idea behind Costamare and International Seaways 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.