Correlation Between Eagle Bulk and Eurodry

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

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

Diversification Opportunities for Eagle Bulk and Eurodry

0.3
  Correlation Coefficient
Eagle Bulk Ship
Eurodry

Weak diversification

The 3 months correlation between Eagle and Eurodry is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Bulk Ship and Eurodry in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Eurodry and Eagle 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 Eagle Bulk Ship are associated (or correlated) with Eurodry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurodry has no effect on the direction of Eagle Bulk i.e., Eagle Bulk and Eurodry go up and down completely randomly.

Pair Corralation between Eagle Bulk and Eurodry

Given the investment horizon of 90 days Eagle Bulk Ship is expected to generate 0.64 times more return on investment than Eurodry. However, Eagle Bulk Ship is 1.56 times less risky than Eurodry. It trades about 0.03 of its potential returns per unit of risk. Eurodry is currently generating about -0.03 per unit of risk. If you would invest  4,223  in Eagle Bulk Ship on October 19, 2021 and sell it today you would earn a total of  225.00  from holding Eagle Bulk Ship or generate 5.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Eagle Bulk Ship  vs.  Eurodry

 Performance (%) 
      Timeline 
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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Eagle Price Channel

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 weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Eurodry Price Channel

Eagle Bulk and Eurodry Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Eagle Bulk and Eurodry

The main advantage of trading using opposite Eagle Bulk and Eurodry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Bulk position performs unexpectedly, Eurodry 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 Eurodry will offset losses from the drop in Eurodry's long position.
The idea behind Eagle Bulk Ship and Eurodry 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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