Correlation Between Global Ship and Reservoir Media

Can any of the company-specific risk be diversified away by investing in both Global Ship and Reservoir Media 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 Reservoir Media 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 Reservoir Media, you can compare the effects of market volatilities on Global Ship and Reservoir Media 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 Reservoir Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and Reservoir Media.

Diversification Opportunities for Global Ship and Reservoir Media

-0.03

Correlation Coefficient

Global Ship  Reservoir Media

Good diversification

The 3 months correlation between Global and Reservoir is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Reservoir Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reservoir Media 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 Reservoir Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reservoir Media has no effect on the direction of Global Ship i.e., Global Ship and Reservoir Media go up and down completely randomly.

Pair Corralation between Global Ship and Reservoir Media

Assuming the 90 days trading horizon Global Ship Lease is expected to under-perform the Reservoir Media. But the preferred stock apears to be less risky and, when comparing its historical volatility, Global Ship Lease is 4.05 times less risky than Reservoir Media. The preferred stock trades about -0.03 of its potential returns per unit of risk. The Reservoir Media is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  763.00  in Reservoir Media on October 1, 2024 and sell it today you would earn a total of  123.00  from holding Reservoir Media or generate 16.12% return on investment over 90 days.

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

Global Ship Lease  vs.  Reservoir Media

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 somewhat strong essential indicators, Global Ship is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Reservoir Media

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Reservoir Media are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Reservoir Media reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Ship and Reservoir Media

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

The idea behind Global Ship Lease and Reservoir Media 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.