Correlation Between Costamare and Safe Bulkers

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

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

Diversification Opportunities for Costamare and Safe Bulkers

-0.56

Correlation Coefficient

Costamare  Safe Bulkers

Excellent diversification

The 3 months correlation between Costamare and Safe is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Costamare and Safe Bulkers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe Bulkers and Costamare 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 Costamare are associated (or correlated) with Safe Bulkers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safe Bulkers has no effect on the direction of Costamare i.e., Costamare and Safe Bulkers go up and down completely randomly.

Pair Corralation between Costamare and Safe Bulkers

Given the investment horizon of 90 days Costamare is expected to under-perform the Safe Bulkers. In addition to that, Costamare is 4.13 times more volatile than Safe Bulkers. It trades about -0.24 of its total potential returns per unit of risk. Safe Bulkers is currently generating about 0.02 per unit of volatility. If you would invest  2,527  in Safe Bulkers on November 29, 2024 and sell it today you would earn a total of  8.00  from holding Safe Bulkers or generate 0.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.22%
Values	Daily Returns

Costamare  vs.  Safe Bulkers

Costamare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Costamare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Safe Bulkers

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Safe Bulkers are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Safe Bulkers is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Costamare and Safe Bulkers

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

The idea behind Costamare and Safe Bulkers 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.