Correlation Between Matson and Safe Bulkers

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

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

Diversification Opportunities for Matson and Safe Bulkers

-0.31

Correlation Coefficient

Matson  Safe Bulkers

Very good diversification

The 3 months correlation between Matson and Safe is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Matson Inc and Safe Bulkers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe Bulkers 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 Safe Bulkers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safe Bulkers has no effect on the direction of Matson i.e., Matson and Safe Bulkers go up and down completely randomly.

Pair Corralation between Matson and Safe Bulkers

Given the investment horizon of 90 days Matson Inc is expected to under-perform the Safe Bulkers. But the stock apears to be less risky and, when comparing its historical volatility, Matson Inc is 1.27 times less risky than Safe Bulkers. The stock trades about -0.02 of its potential returns per unit of risk. The Safe Bulkers is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  352.00  in Safe Bulkers on December 27, 2024 and sell it today you would earn a total of  24.00  from holding Safe Bulkers or generate 6.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Matson Inc  vs.  Safe Bulkers

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.

Safe Bulkers

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Safe Bulkers are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Safe Bulkers may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Matson and Safe Bulkers

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

The idea behind Matson Inc and Safe Bulkers 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.