Correlation Between Nordic American and Eagle Bulk
Can any of the company-specific risk be diversified away by investing in both Nordic American 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 Nordic American and Eagle Bulk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic American Tankers and Eagle Bulk Shipping, you can compare the effects of market volatilities on Nordic American 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 Nordic American with a short position of Eagle Bulk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic American and Eagle Bulk.
Diversification Opportunities for Nordic American and Eagle Bulk
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nordic and Eagle is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Nordic American Tankers 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 Nordic American 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 Nordic American Tankers 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 Nordic American i.e., Nordic American and Eagle Bulk go up and down completely randomly.
Pair Corralation between Nordic American and Eagle Bulk
Considering the 90-day investment horizon Nordic American Tankers is expected to generate 1.05 times more return on investment than Eagle Bulk. However, Nordic American is 1.05 times more volatile than Eagle Bulk Shipping. It trades about 0.01 of its potential returns per unit of risk. Eagle Bulk Shipping is currently generating about 0.01 per unit of risk. If you would invest 379.00 in Nordic American Tankers on January 24, 2024 and sell it today you would lose (1.00) from holding Nordic American Tankers or give up 0.26% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 96.55% |
Values | Daily Returns |
Nordic American Tankers vs. Eagle Bulk Shipping
Performance |
Timeline |
Nordic American Tankers |
Eagle Bulk Shipping |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Nordic American and Eagle Bulk Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nordic American and Eagle Bulk
The main advantage of trading using opposite Nordic American and Eagle Bulk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic American 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.Nordic American vs. International Seaways | Nordic American vs. Scorpio Tankers | Nordic American vs. Dorian LPG | Nordic American vs. Euronav NV |
Eagle Bulk vs. Star Bulk Carriers | Eagle Bulk vs. Golden Ocean Group | Eagle Bulk vs. Global Ship Lease | Eagle Bulk vs. Diana Shipping 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 the Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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