Correlation Between Globus Maritime and Frontline
Can any of the company-specific risk be diversified away by investing in both Globus Maritime and Frontline 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 Globus Maritime and Frontline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globus Maritime and Frontline, you can compare the effects of market volatilities on Globus Maritime and Frontline 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 Globus Maritime with a short position of Frontline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globus Maritime and Frontline.
Diversification Opportunities for Globus Maritime and Frontline
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Globus and Frontline is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Globus Maritime and Frontline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontline and Globus 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 Globus Maritime are associated (or correlated) with Frontline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontline has no effect on the direction of Globus Maritime i.e., Globus Maritime and Frontline go up and down completely randomly.
Pair Corralation between Globus Maritime and Frontline
Given the investment horizon of 90 days Globus Maritime is expected to generate 1.73 times less return on investment than Frontline. In addition to that, Globus Maritime is 1.33 times more volatile than Frontline. It trades about 0.02 of its total potential returns per unit of risk. Frontline is currently generating about 0.05 per unit of volatility. If you would invest 887.00 in Frontline on September 24, 2024 and sell it today you would earn a total of 520.00 from holding Frontline or generate 58.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Globus Maritime vs. Frontline
Performance |
Timeline |
Globus Maritime |
Frontline |
Globus Maritime and Frontline Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Globus Maritime and Frontline
The main advantage of trading using opposite Globus Maritime and Frontline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globus Maritime position performs unexpectedly, Frontline 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 Frontline will offset losses from the drop in Frontline's long position.Globus Maritime vs. Seanergy Maritime Holdings | Globus Maritime vs. United Maritime | Globus Maritime vs. Performance Shipping | Globus Maritime vs. Castor Maritime |
Frontline vs. United Maritime | Frontline vs. Globus Maritime | Frontline vs. Castor Maritime | Frontline vs. Safe Bulkers |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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