Correlation Between Cheniere Energy and Imperial Petroleum
Can any of the company-specific risk be diversified away by investing in both Cheniere Energy 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 Cheniere Energy and Imperial Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheniere Energy Partners and Imperial Petroleum, you can compare the effects of market volatilities on Cheniere Energy 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 Cheniere Energy with a short position of Imperial Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheniere Energy and Imperial Petroleum.
Diversification Opportunities for Cheniere Energy and Imperial Petroleum
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cheniere and Imperial is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Cheniere Energy Partners and Imperial Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Petroleum and Cheniere Energy 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 Cheniere Energy Partners 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 Cheniere Energy i.e., Cheniere Energy and Imperial Petroleum go up and down completely randomly.
Pair Corralation between Cheniere Energy and Imperial Petroleum
Considering the 90-day investment horizon Cheniere Energy Partners is expected to generate 1.5 times more return on investment than Imperial Petroleum. However, Cheniere Energy is 1.5 times more volatile than Imperial Petroleum. It trades about 0.47 of its potential returns per unit of risk. Imperial Petroleum is currently generating about -0.43 per unit of risk. If you would invest 4,788 in Cheniere Energy Partners on August 27, 2024 and sell it today you would earn a total of 676.00 from holding Cheniere Energy Partners or generate 14.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheniere Energy Partners vs. Imperial Petroleum
Performance |
| Timeline |
| Cheniere Energy Partners |
| Imperial Petroleum |
Cheniere Energy and Imperial Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheniere Energy and Imperial Petroleum
The main advantage of trading using opposite Cheniere Energy and Imperial Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheniere Energy 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.| Cheniere Energy vs. Plains All American | Cheniere Energy vs. Genesis Energy LP | Cheniere Energy vs. Western Midstream Partners | Cheniere Energy vs. Hess Midstream Partners |
| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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