Correlation Between Eurodry and International Seaways

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

Diversification Opportunities for Eurodry and International Seaways

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between Eurodry and International is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Eurodry and International Seaways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Seaways 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 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 Eurodry i.e., Eurodry and International Seaways go up and down completely randomly.

Pair Corralation between Eurodry and International Seaways

Given the investment horizon of 90 days Eurodry is expected to generate 2.25 times more return on investment than International Seaways. However, Eurodry is 2.25 times more volatile than International Seaways. It trades about 0.09 of its potential returns per unit of risk. International Seaways is currently generating about 0.03 per unit of risk. If you would invest  365.00  in Eurodry on February 22, 2022 and sell it today you would earn a total of  2,904  from holding Eurodry or generate 795.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Eurodry  vs.  International Seaways

 Performance (%) 
      Timeline 
Eurodry 
Eurodry Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Eurodry are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Eurodry showed solid returns over the last few months and may actually be approaching a breakup point.

Eurodry Price Channel

International Seaways 
International Performance
13 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in International Seaways are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, International Seaways showed solid returns over the last few months and may actually be approaching a breakup point.

International Price Channel

Eurodry and International Seaways Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Eurodry and International Seaways

The main advantage of trading using opposite Eurodry and International Seaways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eurodry 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 Eurodry 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.
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 Focused Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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