Correlation Between Matson and Costamare

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

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

Diversification Opportunities for Matson and Costamare

0.23

Correlation Coefficient

Matson  Costamare

Modest diversification

The 3 months correlation between Matson and Costamare is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Matson Inc and Costamare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costamare and Matson 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 Matson Inc 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 Matson i.e., Matson and Costamare go up and down completely randomly.

Pair Corralation between Matson and Costamare

Given the investment horizon of 90 days Matson Inc is expected to generate 0.84 times more return on investment than Costamare. However, Matson Inc is 1.19 times less risky than Costamare. It trades about -0.05 of its potential returns per unit of risk. Costamare is currently generating about -0.18 per unit of risk. If you would invest  13,523  in Matson Inc on December 29, 2024 and sell it today you would lose (817.00) from holding Matson Inc or give up 6.04% of portfolio value over 90 days.

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

Matson Inc  vs.  Costamare

Matson Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Matson Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Matson is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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

Pair Trading with Matson and Costamare

The main advantage of trading using opposite Matson and Costamare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matson 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 Matson Inc 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.