Correlation Between Genco Shipping and Eagle Bulk

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

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

Diversification Opportunities for Genco Shipping and Eagle Bulk

0.85

Correlation Coefficient

Genco Shipping  Eagle Bulk

Very poor diversification

The 3 months correlation between Genco and Eagle is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Genco Shipping Trading and Eagle Bulk Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Bulk Shipping and Genco Shipping 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 Genco Shipping Trading 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 Shipping has no effect on the direction of Genco Shipping i.e., Genco Shipping and Eagle Bulk go up and down completely randomly.

Pair Corralation between Genco Shipping and Eagle Bulk

Considering the 90-day investment horizon Genco Shipping is expected to generate 1.91 times less return on investment than Eagle Bulk. In addition to that, Genco Shipping is 1.29 times more volatile than Eagle Bulk Shipping. It trades about 0.04 of its total potential returns per unit of risk. Eagle Bulk Shipping is currently generating about 0.09 per unit of volatility. If you would invest  6,155  in Eagle Bulk Shipping on January 19, 2024 and sell it today you would earn a total of  105.00  from holding Eagle Bulk Shipping or generate 1.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	68.18%
Values	Daily Returns

Genco Shipping Trading  vs.  Eagle Bulk Shipping

Genco Shipping Trading

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Genco Shipping Trading are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Genco Shipping disclosed solid returns over the last few months and may actually be approaching a breakup point.

Eagle Bulk Shipping

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eagle Bulk Shipping 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.

Pair Trading with Genco Shipping and Eagle Bulk

The main advantage of trading using opposite Genco Shipping and Eagle Bulk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genco Shipping 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.

The idea behind Genco Shipping Trading and Eagle Bulk Shipping 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.