Correlation Between Safe Bulkers and Industrials Portfolio

Can any of the company-specific risk be diversified away by investing in both Safe Bulkers and Industrials Portfolio 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 Safe Bulkers and Industrials Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Safe Bulkers and Industrials Portfolio Industrials, you can compare the effects of market volatilities on Safe Bulkers and Industrials Portfolio 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 Safe Bulkers with a short position of Industrials Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safe Bulkers and Industrials Portfolio.

Diversification Opportunities for Safe Bulkers and Industrials Portfolio

-0.66

Correlation Coefficient

Safe Bulkers  Industrials Portfolio

Excellent diversification

The 3 months correlation between Safe and Industrials is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Safe Bulkers and Industrials Portfolio Industri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrials Portfolio and Safe Bulkers 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 Safe Bulkers are associated (or correlated) with Industrials Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrials Portfolio has no effect on the direction of Safe Bulkers i.e., Safe Bulkers and Industrials Portfolio go up and down completely randomly.

Pair Corralation between Safe Bulkers and Industrials Portfolio

Allowing for the 90-day total investment horizon Safe Bulkers is expected to generate 1.5 times more return on investment than Industrials Portfolio. However, Safe Bulkers is 1.5 times more volatile than Industrials Portfolio Industrials. It trades about 0.08 of its potential returns per unit of risk. Industrials Portfolio Industrials is currently generating about 0.0 per unit of risk. If you would invest  343.00  in Safe Bulkers on December 29, 2024 and sell it today you would earn a total of  33.00  from holding Safe Bulkers or generate 9.62% return on investment over 90 days.

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

Safe Bulkers  vs.  Industrials Portfolio Industri

Safe Bulkers

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Safe Bulkers are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Safe Bulkers may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Industrials Portfolio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Industrials Portfolio Industrials has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Industrials Portfolio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Safe Bulkers and Industrials Portfolio

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

The idea behind Safe Bulkers and Industrials Portfolio Industrials 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.