Correlation Between Eneti and Matson

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

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

Diversification Opportunities for Eneti and Matson

0.73

Correlation Coefficient

Eneti  Matson

Poor diversification

The 3 months correlation between Eneti and Matson is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Eneti Inc and Matson Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matson Inc and Eneti 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 Eneti Inc are associated (or correlated) with Matson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matson Inc has no effect on the direction of Eneti i.e., Eneti and Matson go up and down completely randomly.

Pair Corralation between Eneti and Matson

If you would invest  13,440  in Matson Inc on September 3, 2024 and sell it today you would earn a total of  1,878  from holding Matson Inc or generate 13.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

Eneti Inc  vs.  Matson Inc

Eneti Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eneti Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Eneti is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

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.

Pair Trading with Eneti and Matson

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

The idea behind Eneti Inc and Matson Inc 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.