Correlation Between Pacific Basin and Navios Maritime

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

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

Diversification Opportunities for Pacific Basin and Navios Maritime

0.68

Correlation Coefficient

Pacific Basin  Navios Maritime

Poor diversification

The 3 months correlation between Pacific and Navios is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Basin Shipping and Navios Maritime Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navios Maritime Partners and Pacific Basin 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 Pacific Basin Shipping are associated (or correlated) with Navios Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navios Maritime Partners has no effect on the direction of Pacific Basin i.e., Pacific Basin and Navios Maritime go up and down completely randomly.

Pair Corralation between Pacific Basin and Navios Maritime

Assuming the 90 days horizon Pacific Basin Shipping is expected to under-perform the Navios Maritime. But the pink sheet apears to be less risky and, when comparing its historical volatility, Pacific Basin Shipping is 2.36 times less risky than Navios Maritime. The pink sheet trades about -0.24 of its potential returns per unit of risk. The Navios Maritime Partners is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  4,378  in Navios Maritime Partners on October 15, 2024 and sell it today you would earn a total of  216.00  from holding Navios Maritime Partners or generate 4.93% return on investment over 90 days.

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

Pacific Basin Shipping  vs.  Navios Maritime Partners

Pacific Basin Shipping

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacific Basin Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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.

Pair Trading with Pacific Basin and Navios Maritime

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

The idea behind Pacific Basin Shipping and Navios Maritime Partners 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..