Correlation Between Golden Ocean and Navios Maritime

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

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

Diversification Opportunities for Golden Ocean and Navios Maritime

0.89

Correlation Coefficient

Golden Ocean  Navios Maritime

Very poor diversification

The 3 months correlation between Golden and Navios is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Golden Ocean Group 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 Golden Ocean 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 Golden Ocean Group 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 Golden Ocean i.e., Golden Ocean and Navios Maritime go up and down completely randomly.

Pair Corralation between Golden Ocean and Navios Maritime

Given the investment horizon of 90 days Golden Ocean Group is expected to under-perform the Navios Maritime. In addition to that, Golden Ocean is 1.02 times more volatile than Navios Maritime Partners. It trades about -0.15 of its total potential returns per unit of risk. Navios Maritime Partners is currently generating about -0.13 per unit of volatility. If you would invest  5,215  in Navios Maritime Partners on November 19, 2024 and sell it today you would lose (815.00) from holding Navios Maritime Partners or give up 15.63% of portfolio value over 90 days.

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

Golden Ocean Group  vs.  Navios Maritime Partners

Golden Ocean Group

Risk-Adjusted Performance

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 technical and fundamental indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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 weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Golden Ocean and Navios Maritime

The main advantage of trading using opposite Golden Ocean and Navios Maritime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Ocean 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 Golden Ocean Group 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.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.