Correlation Between Dynagas LNG and Imperial Petroleum
Can any of the company-specific risk be diversified away by investing in both Dynagas LNG 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 Dynagas LNG and Imperial Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynagas LNG Partners and Imperial Petroleum, you can compare the effects of market volatilities on Dynagas LNG 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 Dynagas LNG with a short position of Imperial Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynagas LNG and Imperial Petroleum.
Diversification Opportunities for Dynagas LNG and Imperial Petroleum
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dynagas and Imperial is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Dynagas LNG Partners and Imperial Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Petroleum and Dynagas LNG 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 Dynagas LNG 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 Dynagas LNG i.e., Dynagas LNG and Imperial Petroleum go up and down completely randomly.
Pair Corralation between Dynagas LNG and Imperial Petroleum
Assuming the 90 days trading horizon Dynagas LNG Partners is expected to generate 0.14 times more return on investment than Imperial Petroleum. However, Dynagas LNG Partners is 6.98 times less risky than Imperial Petroleum. It trades about -0.07 of its potential returns per unit of risk. Imperial Petroleum is currently generating about -0.11 per unit of risk. If you would invest 2,604 in Dynagas LNG Partners on November 9, 2024 and sell it today you would lose (16.00) from holding Dynagas LNG Partners or give up 0.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dynagas LNG Partners vs. Imperial Petroleum
Performance |
| Timeline |
| Dynagas LNG Partners |
| Imperial Petroleum |
Dynagas LNG and Imperial Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynagas LNG and Imperial Petroleum
The main advantage of trading using opposite Dynagas LNG and Imperial Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynagas LNG 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.| Dynagas LNG vs. GasLog Partners LP | Dynagas LNG vs. Dynagas LNG Partners | Dynagas LNG vs. GasLog Partners LP | Dynagas LNG vs. GasLog Partners LP |
| Imperial Petroleum vs. CBL International Limited | Imperial Petroleum vs. Mirage Energy Corp | Imperial Petroleum vs. Marine Petroleum Trust | Imperial Petroleum vs. Teekay Tankers |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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