Correlation Between Capital Product and Global Ship

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

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

Diversification Opportunities for Capital Product and Global Ship

0.32

Correlation Coefficient

Capital Product  Global Ship

Weak diversification

The 3 months correlation between Capital and Global is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Capital Product Partners and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease and Capital Product 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 Capital Product Partners are associated (or correlated) with Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of Capital Product i.e., Capital Product and Global Ship go up and down completely randomly.

Pair Corralation between Capital Product and Global Ship

If you would invest (100.00) in Capital Product Partners on September 5, 2024 and sell it today you would earn a total of  100.00  from holding Capital Product Partners or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

Capital Product Partners  vs.  Global Ship Lease

Capital Product Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capital Product Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, Capital Product is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

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 quite persistent basic indicators, Global Ship is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Capital Product and Global Ship

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

The idea behind Capital Product Partners and Global Ship Lease 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.