Correlation Between Eurodry and Eagle Bulk

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Can any of the company-specific risk be diversified away by investing in both Eurodry and Eagle Bulk 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 Eurodry and Eagle Bulk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eurodry and Eagle Bulk Ship, you can compare the effects of market volatilities on Eurodry and Eagle Bulk 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 Eurodry with a short position of Eagle Bulk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eurodry and Eagle Bulk.

Diversification Opportunities for Eurodry and Eagle Bulk

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Eurodry and Eagle is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Eurodry and Eagle Bulk Ship in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Bulk Ship and Eurodry 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 Eurodry are associated (or correlated) with Eagle Bulk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Bulk Ship has no effect on the direction of Eurodry i.e., Eurodry and Eagle Bulk go up and down completely randomly.

Pair Corralation between Eurodry and Eagle Bulk

Given the investment horizon of 90 days Eurodry is expected to under-perform the Eagle Bulk. In addition to that, Eurodry is 1.13 times more volatile than Eagle Bulk Ship. It trades about -0.14 of its total potential returns per unit of risk. Eagle Bulk Ship is currently generating about -0.11 per unit of volatility. If you would invest  5,244  in Eagle Bulk Ship on July 3, 2022 and sell it today you would lose (926.00)  from holding Eagle Bulk Ship or give up 17.66% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Eurodry  vs.  Eagle Bulk Ship

 Performance (%) 
       Timeline  
Eurodry 
Eurodry Performance
0 of 100
Over the last 90 days Eurodry has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Eurodry Price Channel

Eagle Bulk Ship 
Eagle Performance
0 of 100
Over the last 90 days Eagle Bulk Ship has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Eagle Bulk is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Eagle Price Channel

Eurodry and Eagle Bulk Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Eurodry and Eagle Bulk

The main advantage of trading using opposite Eurodry and Eagle Bulk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eurodry position performs unexpectedly, Eagle Bulk 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 Eagle Bulk will offset losses from the drop in Eagle Bulk's long position.
Eurodry vs. Amazon Inc
The idea behind Eurodry and Eagle Bulk Ship 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.
Eagle Bulk vs. Amazon Inc
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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