Correlation Between Navios Maritime and Matson

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

Diversification Opportunities for Navios Maritime and Matson

0.63

Correlation Coefficient

Navios Maritime  Matson

Poor diversification

The 3 months correlation between Navios and Matson is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Navios Maritime Partners and Matson Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matson Inc 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 Matson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matson Inc has no effect on the direction of Navios Maritime i.e., Navios Maritime and Matson go up and down completely randomly.

Pair Corralation between Navios Maritime and Matson

Considering the 90-day investment horizon Navios Maritime Partners is expected to under-perform the Matson. In addition to that, Navios Maritime is 1.19 times more volatile than Matson Inc. It trades about -0.06 of its total potential returns per unit of risk. Matson Inc is currently generating about -0.03 per unit of volatility. If you would invest  13,523  in Matson Inc on December 28, 2024 and sell it today you would lose (461.00) from holding Matson Inc or give up 3.41% 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.  Matson Inc

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.

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.

Pair Trading with Navios Maritime and Matson

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

The idea behind Navios Maritime Partners and Matson Inc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.