Correlation Between 2020 Bulkers and Golden Ocean

Can any of the company-specific risk be diversified away by investing in both 2020 Bulkers and Golden Ocean 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 2020 Bulkers and Golden Ocean into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 2020 Bulkers and Golden Ocean Group, you can compare the effects of market volatilities on 2020 Bulkers and Golden Ocean 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 2020 Bulkers with a short position of Golden Ocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of 2020 Bulkers and Golden Ocean.

Diversification Opportunities for 2020 Bulkers and Golden Ocean

0.93

Correlation Coefficient

2020 Bulkers  Golden Ocean

Almost no diversification

The 3 months correlation between 2020 and Golden is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding 2020 Bulkers and Golden Ocean Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Ocean Group and 2020 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 2020 Bulkers are associated (or correlated) with Golden Ocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Ocean Group has no effect on the direction of 2020 Bulkers i.e., 2020 Bulkers and Golden Ocean go up and down completely randomly.

Pair Corralation between 2020 Bulkers and Golden Ocean

Assuming the 90 days trading horizon 2020 Bulkers is expected to generate 1.16 times more return on investment than Golden Ocean. However, 2020 Bulkers is 1.16 times more volatile than Golden Ocean Group. It trades about 0.16 of its potential returns per unit of risk. Golden Ocean Group is currently generating about -0.04 per unit of risk. If you would invest  12,366  in 2020 Bulkers on October 9, 2024 and sell it today you would earn a total of  834.00  from holding 2020 Bulkers or generate 6.74% return on investment over 90 days.

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

2020 Bulkers  vs.  Golden Ocean Group

2020 Bulkers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 2020 Bulkers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Golden Ocean Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Ocean Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with 2020 Bulkers and Golden Ocean

The main advantage of trading using opposite 2020 Bulkers and Golden Ocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 2020 Bulkers position performs unexpectedly, Golden Ocean 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 Golden Ocean will offset losses from the drop in Golden Ocean's long position.

The idea behind 2020 Bulkers and Golden Ocean Group 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.