Correlation Between Navios Maritime and Cool

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

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

Diversification Opportunities for Navios Maritime and Cool

0.64

Correlation Coefficient

Navios Maritime  Cool

Poor diversification

The 3 months correlation between Navios and Cool is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Navios Maritime Partners and Cool Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cool Company and Navios 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 Navios Maritime Partners are associated (or correlated) with Cool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cool Company has no effect on the direction of Navios Maritime i.e., Navios Maritime and Cool go up and down completely randomly.

Pair Corralation between Navios Maritime and Cool

Considering the 90-day investment horizon Navios Maritime Partners is expected to generate 0.97 times more return on investment than Cool. However, Navios Maritime Partners is 1.03 times less risky than Cool. It trades about -0.04 of its potential returns per unit of risk. Cool Company is currently generating about -0.18 per unit of risk. If you would invest  5,253  in Navios Maritime Partners on September 3, 2024 and sell it today you would lose (409.00) from holding Navios Maritime Partners or give up 7.79% of portfolio value over 90 days.

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

Navios Maritime Partners  vs.  Cool Company

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 latest stock price disarray, may contribute to short-term losses for the investors.

Cool Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cool Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Navios Maritime and Cool

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

The idea behind Navios Maritime Partners and Cool Company 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.