Correlation Between Navios Maritime and Golden Ocean

Can any of the company-specific risk be diversified away by investing in both Navios Maritime and Golden Ocean 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 Golden Ocean 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 Golden Ocean Group, you can compare the effects of market volatilities on Navios Maritime and Golden Ocean 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 Golden Ocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Navios Maritime and Golden Ocean.

Diversification Opportunities for Navios Maritime and Golden Ocean

0.6

Correlation Coefficient

Navios Maritime  Golden Ocean

Poor diversification

The 3 months correlation between Navios and Golden is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Navios Maritime Partners and Golden Ocean Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Ocean Group 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 Golden Ocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Ocean Group has no effect on the direction of Navios Maritime i.e., Navios Maritime and Golden Ocean go up and down completely randomly.

Pair Corralation between Navios Maritime and Golden Ocean

Considering the 90-day investment horizon Navios Maritime Partners is expected to under-perform the Golden Ocean. But the stock apears to be less risky and, when comparing its historical volatility, Navios Maritime Partners is 1.59 times less risky than Golden Ocean. The stock trades about -0.07 of its potential returns per unit of risk. The Golden Ocean Group is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  861.00  in Golden Ocean Group on December 28, 2024 and sell it today you would lose (25.00) from holding Golden Ocean Group or give up 2.9% of portfolio value over 90 days.

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

Navios Maritime Partners  vs.  Golden Ocean Group

Navios Maritime Partners

Risk-Adjusted Performance

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 latest weak performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Golden Ocean Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golden Ocean Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Golden Ocean is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Navios Maritime and Golden Ocean

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

The idea behind Navios Maritime Partners and Golden Ocean Group 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.