Correlation Between Where Food and Global Ship

Can any of the company-specific risk be diversified away by investing in both Where Food and Global Ship 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 Where Food and Global Ship into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Where Food Comes and Global Ship Lease, you can compare the effects of market volatilities on Where Food and Global Ship 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 Where Food with a short position of Global Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of Where Food and Global Ship.

Diversification Opportunities for Where Food and Global Ship

0.29

Correlation Coefficient

Where Food  Global Ship

Modest diversification

The 3 months correlation between Where and Global is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Where Food Comes and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease and Where Food 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 Where Food Comes are associated (or correlated) with Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of Where Food i.e., Where Food and Global Ship go up and down completely randomly.

Pair Corralation between Where Food and Global Ship

Given the investment horizon of 90 days Where Food is expected to generate 2.13 times less return on investment than Global Ship. In addition to that, Where Food is 2.66 times more volatile than Global Ship Lease. It trades about 0.01 of its total potential returns per unit of risk. Global Ship Lease is currently generating about 0.05 per unit of volatility. If you would invest  2,350  in Global Ship Lease on October 1, 2024 and sell it today you would earn a total of  252.00  from holding Global Ship Lease or generate 10.72% return on investment over 90 days.

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

Where Food Comes  vs.  Global Ship Lease

Where Food Comes

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Where Food Comes are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Where Food reported solid returns over the last few months and may actually be approaching a breakup point.

Global Ship Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Ship Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Global Ship is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Where Food and Global Ship

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

The idea behind Where Food Comes and Global Ship Lease 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.