Correlation Between Navios Maritime and TOP Ships

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

Diversification Opportunities for Navios Maritime and TOP Ships

0.31

Correlation Coefficient

Navios Maritime  TOP Ships

Weak diversification

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

Pair Corralation between Navios Maritime and TOP Ships

Considering the 90-day investment horizon Navios Maritime Partners is expected to under-perform the TOP Ships. But the stock apears to be less risky and, when comparing its historical volatility, Navios Maritime Partners is 1.23 times less risky than TOP Ships. The stock trades about -0.07 of its potential returns per unit of risk. The TOP Ships is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  607.00  in TOP Ships on December 28, 2024 and sell it today you would earn a total of  37.00  from holding TOP Ships or generate 6.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Navios Maritime Partners  vs.  TOP Ships

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.

TOP Ships

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TOP Ships are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, TOP Ships may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Navios Maritime and TOP Ships

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

The idea behind Navios Maritime Partners and TOP Ships 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..