Correlation Between Navios Maritime and CPLP Old

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

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

Diversification Opportunities for Navios Maritime and CPLP Old

0.38

Correlation Coefficient

Navios Maritime  CPLP Old

Weak diversification

The 3 months correlation between Navios and CPLP is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Navios Maritime Partners and CPLP Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPLP Old and Navios Maritime 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 Navios Maritime Partners are associated (or correlated) with CPLP Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPLP Old has no effect on the direction of Navios Maritime i.e., Navios Maritime and CPLP Old go up and down completely randomly.

Pair Corralation between Navios Maritime and CPLP Old

Considering the 90-day investment horizon Navios Maritime Partners is expected to generate 0.13 times more return on investment than CPLP Old. However, Navios Maritime Partners is 7.83 times less risky than CPLP Old. It trades about -0.01 of its potential returns per unit of risk. CPLP Old is currently generating about -0.21 per unit of risk. If you would invest  4,667  in Navios Maritime Partners on October 25, 2024 and sell it today you would lose (418.00) from holding Navios Maritime Partners or give up 8.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	17.89%
Values	Daily Returns

Navios Maritime Partners  vs.  CPLP Old

Navios Maritime Partners

Risk-Adjusted Performance

0 of 100

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 February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

CPLP Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CPLP Old has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, CPLP Old is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Navios Maritime and CPLP Old

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

The idea behind Navios Maritime Partners and CPLP Old 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.