Correlation Between Danaos and Navios Maritime

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

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

Diversification Opportunities for Danaos and Navios Maritime

0.15

Correlation Coefficient

Danaos  Navios Maritime

Average diversification

The 3 months correlation between Danaos and Navios is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Danaos and Navios Maritime Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navios Maritime Partners and Danaos 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 Danaos are associated (or correlated) with Navios Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navios Maritime Partners has no effect on the direction of Danaos i.e., Danaos and Navios Maritime go up and down completely randomly.

Pair Corralation between Danaos and Navios Maritime

Considering the 90-day investment horizon Danaos is expected to generate 0.77 times more return on investment than Navios Maritime. However, Danaos is 1.31 times less risky than Navios Maritime. It trades about 0.02 of its potential returns per unit of risk. Navios Maritime Partners is currently generating about -0.06 per unit of risk. If you would invest  7,805  in Danaos on December 28, 2024 and sell it today you would earn a total of  102.00  from holding Danaos or generate 1.31% return on investment over 90 days.

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

Danaos  vs.  Navios Maritime Partners

Danaos

Risk-Adjusted Performance

Weak

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

Navios Maritime Partners

Risk-Adjusted Performance

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 latest weak performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Danaos and Navios Maritime

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

The idea behind Danaos and Navios Maritime Partners 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.