Correlation Between CBL International and Imperial Petroleum
Can any of the company-specific risk be diversified away by investing in both CBL International and Imperial Petroleum 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 CBL International and Imperial Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CBL International Limited and Imperial Petroleum, you can compare the effects of market volatilities on CBL International and Imperial Petroleum 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 CBL International with a short position of Imperial Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of CBL International and Imperial Petroleum.
Diversification Opportunities for CBL International and Imperial Petroleum
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CBL and Imperial is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding CBL International Limited and Imperial Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Petroleum and CBL International 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 CBL International Limited are associated (or correlated) with Imperial Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Petroleum has no effect on the direction of CBL International i.e., CBL International and Imperial Petroleum go up and down completely randomly.
Pair Corralation between CBL International and Imperial Petroleum
Given the investment horizon of 90 days CBL International Limited is expected to generate 2.82 times more return on investment than Imperial Petroleum. However, CBL International is 2.82 times more volatile than Imperial Petroleum. It trades about 0.1 of its potential returns per unit of risk. Imperial Petroleum is currently generating about -0.5 per unit of risk. If you would invest 94.00 in CBL International Limited on August 27, 2024 and sell it today you would earn a total of 5.00 from holding CBL International Limited or generate 5.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CBL International Limited vs. Imperial Petroleum
Performance |
| Timeline |
| CBL International |
| Imperial Petroleum |
CBL International and Imperial Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CBL International and Imperial Petroleum
The main advantage of trading using opposite CBL International and Imperial Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CBL International position performs unexpectedly, Imperial Petroleum 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 Imperial Petroleum will offset losses from the drop in Imperial Petroleum's long position.| CBL International vs. Western Midstream Partners | CBL International vs. DT Midstream | CBL International vs. MPLX LP | CBL International vs. BP Prudhoe Bay |
| Imperial Petroleum vs. Western Midstream Partners | Imperial Petroleum vs. DT Midstream | Imperial Petroleum vs. MPLX LP | Imperial Petroleum vs. BP Prudhoe Bay |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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