Correlation Between Genco Shipping and Nordic American
Can any of the company-specific risk be diversified away by investing in both Genco Shipping and Nordic American 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 Genco Shipping and Nordic American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genco Shipping Trading and Nordic American Tankers, you can compare the effects of market volatilities on Genco Shipping and Nordic American 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 Genco Shipping with a short position of Nordic American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genco Shipping and Nordic American.
Diversification Opportunities for Genco Shipping and Nordic American
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Genco and Nordic is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Genco Shipping Trading and Nordic American Tankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic American Tankers and Genco Shipping 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 Genco Shipping Trading are associated (or correlated) with Nordic American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic American Tankers has no effect on the direction of Genco Shipping i.e., Genco Shipping and Nordic American go up and down completely randomly.
Pair Corralation between Genco Shipping and Nordic American
Considering the 90-day investment horizon Genco Shipping Trading is expected to generate 0.89 times more return on investment than Nordic American. However, Genco Shipping Trading is 1.12 times less risky than Nordic American. It trades about -0.04 of its potential returns per unit of risk. Nordic American Tankers is currently generating about -0.17 per unit of risk. If you would invest 1,650 in Genco Shipping Trading on September 5, 2024 and sell it today you would lose (92.00) from holding Genco Shipping Trading or give up 5.58% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Genco Shipping Trading vs. Nordic American Tankers
Performance |
Timeline |
Genco Shipping Trading |
Nordic American Tankers |
Genco Shipping and Nordic American Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Genco Shipping and Nordic American
The main advantage of trading using opposite Genco Shipping and Nordic American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genco Shipping position performs unexpectedly, Nordic American 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 Nordic American will offset losses from the drop in Nordic American's long position.Genco Shipping vs. Star Bulk Carriers | Genco Shipping vs. Golden Ocean Group | Genco Shipping vs. Global Ship Lease | Genco Shipping vs. Danaos |
Nordic American vs. Genco Shipping Trading | Nordic American vs. Golden Ocean Group | Nordic American vs. Star Bulk Carriers | Nordic American vs. Oceanpal |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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