Correlation Between International Container and Costamare

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

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

Diversification Opportunities for International Container and Costamare

0.42

Correlation Coefficient

International Container  Costamare

Very weak diversification

The 3 months correlation between International and Costamare is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding International Container Termin and Costamare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costamare and International Container 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 International Container Terminal are associated (or correlated) with Costamare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costamare has no effect on the direction of International Container i.e., International Container and Costamare go up and down completely randomly.

Pair Corralation between International Container and Costamare

Assuming the 90 days horizon International Container is expected to generate 1.38 times less return on investment than Costamare. In addition to that, International Container is 2.05 times more volatile than Costamare. It trades about 0.05 of its total potential returns per unit of risk. Costamare is currently generating about 0.15 per unit of volatility. If you would invest  1,127  in Costamare on January 31, 2024 and sell it today you would earn a total of  64.00  from holding Costamare or generate 5.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

International Container Termin  vs.  Costamare

International Container

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in International Container Terminal are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, International Container reported solid returns over the last few months and may actually be approaching a breakup point.

Costamare

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Costamare are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Costamare exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Container and Costamare

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

The idea behind International Container Terminal and Costamare 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 Stocks Directory module to find actively traded stocks across global markets.