Correlation Between Matson and Navios Maritime

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

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

Diversification Opportunities for Matson and Navios Maritime

-0.42

Correlation Coefficient

Matson  Navios Maritime

Very good diversification

The 3 months correlation between Matson and Navios is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Matson Inc and Navios Maritime Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navios Maritime Partners and Matson 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 Matson Inc are associated (or correlated) with Navios Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navios Maritime Partners has no effect on the direction of Matson i.e., Matson and Navios Maritime go up and down completely randomly.

Pair Corralation between Matson and Navios Maritime

Given the investment horizon of 90 days Matson Inc is expected to generate 1.08 times more return on investment than Navios Maritime. However, Matson is 1.08 times more volatile than Navios Maritime Partners. It trades about 0.1 of its potential returns per unit of risk. Navios Maritime Partners is currently generating about -0.04 per unit of risk. If you would invest  13,438  in Matson Inc on September 4, 2024 and sell it today you would earn a total of  2,174  from holding Matson Inc or generate 16.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Matson Inc  vs.  Navios Maritime Partners

Matson Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Matson Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Matson showed solid returns over the last few months and may actually be approaching a breakup point.

Navios Maritime Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Navios Maritime Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Navios Maritime is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Matson and Navios Maritime

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

The idea behind Matson Inc and Navios Maritime Partners 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.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.