Correlation Between Castor Maritime and DT Midstream

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

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

Diversification Opportunities for Castor Maritime and DT Midstream

-0.79

Correlation Coefficient

Castor Maritime  DT Midstream

Pay attention - limited upside

The 3 months correlation between Castor and DTM is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Castor Maritime and DT Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DT Midstream and Castor Maritime 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 Castor Maritime are associated (or correlated) with DT Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DT Midstream has no effect on the direction of Castor Maritime i.e., Castor Maritime and DT Midstream go up and down completely randomly.

Pair Corralation between Castor Maritime and DT Midstream

Given the investment horizon of 90 days Castor Maritime is expected to under-perform the DT Midstream. In addition to that, Castor Maritime is 1.43 times more volatile than DT Midstream. It trades about -0.21 of its total potential returns per unit of risk. DT Midstream is currently generating about 0.24 per unit of volatility. If you would invest  7,848  in DT Midstream on September 24, 2024 and sell it today you would earn a total of  2,292  from holding DT Midstream or generate 29.2% return on investment over 90 days.

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

Castor Maritime  vs.  DT Midstream

Castor Maritime

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Castor Maritime has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

DT Midstream

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DT Midstream are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, DT Midstream displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Castor Maritime and DT Midstream

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

The idea behind Castor Maritime and DT Midstream 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.