Correlation Between Safe Bulkers and Global Partners

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

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

Diversification Opportunities for Safe Bulkers and Global Partners

-0.63

Correlation Coefficient

Safe Bulkers  Global Partners

Excellent diversification

The 3 months correlation between Safe and Global is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Safe Bulkers and Global Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Partners LP and Safe Bulkers 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 Safe Bulkers are associated (or correlated) with Global Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Partners LP has no effect on the direction of Safe Bulkers i.e., Safe Bulkers and Global Partners go up and down completely randomly.

Pair Corralation between Safe Bulkers and Global Partners

Allowing for the 90-day total investment horizon Safe Bulkers is expected to under-perform the Global Partners. But the stock apears to be less risky and, when comparing its historical volatility, Safe Bulkers is 1.12 times less risky than Global Partners. The stock trades about -0.29 of its potential returns per unit of risk. The Global Partners LP is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4,376  in Global Partners LP on September 26, 2024 and sell it today you would earn a total of  412.00  from holding Global Partners LP or generate 9.41% return on investment over 90 days.

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

Safe Bulkers  vs.  Global Partners LP

Safe Bulkers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safe Bulkers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Global Partners LP

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Partners LP are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak essential indicators, Global Partners may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Safe Bulkers and Global Partners

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

The idea behind Safe Bulkers and Global Partners LP 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.