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

0.83

Correlation Coefficient

Navios Maritime  TOP Ships

Very poor diversification

The 3 months correlation between Navios and TOP is 0.83. 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 generate 0.56 times more return on investment than TOP Ships. However, Navios Maritime Partners is 1.79 times less risky than TOP Ships. It trades about 0.06 of its potential returns per unit of risk. TOP Ships is currently generating about 0.0 per unit of risk. If you would invest  2,655  in Navios Maritime Partners on November 19, 2024 and sell it today you would earn a total of  1,745  from holding Navios Maritime Partners or generate 65.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.6%
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 weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

TOP Ships

Risk-Adjusted Performance

Very Weak

Over the last 90 days TOP Ships 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 basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.