Correlation Between Hess Midstream and Imperial Petroleum
Can any of the company-specific risk be diversified away by investing in both Hess Midstream 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 Hess Midstream and Imperial Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hess Midstream Partners and Imperial Petroleum Preferred, you can compare the effects of market volatilities on Hess Midstream 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 Hess Midstream with a short position of Imperial Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hess Midstream and Imperial Petroleum.
Diversification Opportunities for Hess Midstream and Imperial Petroleum
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hess and Imperial is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hess Midstream Partners and Imperial Petroleum Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Petroleum and Hess Midstream 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 Hess Midstream 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 Hess Midstream i.e., Hess Midstream and Imperial Petroleum go up and down completely randomly.
Pair Corralation between Hess Midstream and Imperial Petroleum
Given the investment horizon of 90 days Hess Midstream Partners is expected to generate 4.46 times more return on investment than Imperial Petroleum. However, Hess Midstream is 4.46 times more volatile than Imperial Petroleum Preferred. It trades about 0.03 of its potential returns per unit of risk. Imperial Petroleum Preferred is currently generating about -0.1 per unit of risk. If you would invest 4,019 in Hess Midstream Partners on November 29, 2024 and sell it today you would earn a total of 29.00 from holding Hess Midstream Partners or generate 0.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hess Midstream Partners vs. Imperial Petroleum Preferred
Performance |
| Timeline |
| Hess Midstream Partners |
| Imperial Petroleum |
Hess Midstream and Imperial Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hess Midstream and Imperial Petroleum
The main advantage of trading using opposite Hess Midstream and Imperial Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hess Midstream 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.| Hess Midstream vs. MPLX LP | Hess Midstream vs. Western Midstream Partners | Hess Midstream vs. Plains All American | Hess Midstream vs. Antero Midstream Partners |
| Imperial Petroleum vs. Imperial Petroleum | Imperial Petroleum vs. Dynagas LNG Partners | Imperial Petroleum vs. GasLog Partners LP | Imperial Petroleum vs. GasLog Partners LP |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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