Correlation Between Global Ship and FlexShopper

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

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

Diversification Opportunities for Global Ship and FlexShopper

-0.18

Correlation Coefficient

Global Ship  FlexShopper

Good diversification

The 3 months correlation between Global and FlexShopper is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and FlexShopper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShopper and Global Ship 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 Global Ship Lease are associated (or correlated) with FlexShopper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShopper has no effect on the direction of Global Ship i.e., Global Ship and FlexShopper go up and down completely randomly.

Pair Corralation between Global Ship and FlexShopper

Considering the 90-day investment horizon Global Ship Lease is expected to generate 0.29 times more return on investment than FlexShopper. However, Global Ship Lease is 3.47 times less risky than FlexShopper. It trades about 0.08 of its potential returns per unit of risk. FlexShopper is currently generating about -0.02 per unit of risk. If you would invest  2,127  in Global Ship Lease on December 30, 2024 and sell it today you would earn a total of  181.00  from holding Global Ship Lease or generate 8.51% return on investment over 90 days.

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

Global Ship Lease  vs.  FlexShopper

Global Ship Lease

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Global Ship may actually be approaching a critical reversion point that can send shares even higher in April 2025.

FlexShopper

Risk-Adjusted Performance

Very Weak

Over the last 90 days FlexShopper has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Global Ship and FlexShopper

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

The idea behind Global Ship Lease and FlexShopper 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.