Correlation Between Kirby and Costamare

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

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

Diversification Opportunities for Kirby and Costamare

0.58

Correlation Coefficient

Kirby  Costamare

Very weak diversification

The 3 months correlation between Kirby and Costamare is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Kirby and Costamare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costamare and Kirby 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 Kirby are associated (or correlated) with Costamare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costamare has no effect on the direction of Kirby i.e., Kirby and Costamare go up and down completely randomly.

Pair Corralation between Kirby and Costamare

Considering the 90-day investment horizon Kirby is expected to under-perform the Costamare. In addition to that, Kirby is 1.19 times more volatile than Costamare. It trades about -0.6 of its total potential returns per unit of risk. Costamare is currently generating about -0.12 per unit of volatility. If you would invest  1,320  in Costamare on September 29, 2024 and sell it today you would lose (39.00) from holding Costamare or give up 2.95% of portfolio value over 90 days.

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

Kirby  vs.  Costamare

Kirby

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kirby has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Costamare

Risk-Adjusted Performance

0 of 100

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 January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Kirby and Costamare

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

The idea behind Kirby and Costamare 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 Valuation module to check real value of public entities based on technical and fundamental data.