Correlation Between Global Ship and W P

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

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

Diversification Opportunities for Global Ship and W P

0.06

Correlation Coefficient

Global Ship  W P

Significant diversification

The 3 months correlation between Global and WPY is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and W P Carey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on W P Carey and Global Ship 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 Global Ship Lease are associated (or correlated) with W P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of W P Carey has no effect on the direction of Global Ship i.e., Global Ship and W P go up and down completely randomly.

Pair Corralation between Global Ship and W P

Assuming the 90 days horizon Global Ship Lease is expected to under-perform the W P. In addition to that, Global Ship is 1.86 times more volatile than W P Carey. It trades about -0.07 of its total potential returns per unit of risk. W P Carey is currently generating about 0.01 per unit of volatility. If you would invest  5,341  in W P Carey on September 3, 2024 and sell it today you would earn a total of  31.00  from holding W P Carey or generate 0.58% return on investment over 90 days.

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

Global Ship Lease  vs.  W P Carey

Global Ship Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Ship Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

W P Carey

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in W P Carey are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, W P is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Global Ship and W P

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

The idea behind Global Ship Lease and W P Carey 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.