Correlation Between United Maritime and Nordic American

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

By analyzing existing cross correlation between United Maritime and Nordic American Tankers, you can compare the effects of market volatilities on United Maritime and Nordic American 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 United Maritime with a short position of Nordic American. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Maritime and Nordic American.

Diversification Opportunities for United Maritime and Nordic American

0.15

Correlation Coefficient

United Maritime  Nordic American

Average diversification

The 3 months correlation between United and Nordic is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding United Maritime and Nordic American Tankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic American Tankers and United 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 United Maritime are associated (or correlated) with Nordic American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic American Tankers has no effect on the direction of United Maritime i.e., United Maritime and Nordic American go up and down completely randomly.

Pair Corralation between United Maritime and Nordic American

Given the investment horizon of 90 days United Maritime is expected to under-perform the Nordic American. In addition to that, United Maritime is 1.3 times more volatile than Nordic American Tankers. It trades about -0.09 of its total potential returns per unit of risk. Nordic American Tankers is currently generating about 0.05 per unit of volatility. If you would invest  239.00  in Nordic American Tankers on December 28, 2024 and sell it today you would earn a total of  14.00  from holding Nordic American Tankers or generate 5.86% return on investment over 90 days.

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

United Maritime  vs.  Nordic American Tankers

United Maritime

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Maritime has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Nordic American Tankers

Risk-Adjusted Performance

Insignificant

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

Pair Trading with United Maritime and Nordic American

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

The idea behind United Maritime and Nordic American Tankers 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.