Correlation Between Imperial Petroleum and Dynagas LNG
Can any of the company-specific risk be diversified away by investing in both Imperial Petroleum and Dynagas LNG 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 Imperial Petroleum and Dynagas LNG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Imperial Petroleum and Dynagas LNG Partners, you can compare the effects of market volatilities on Imperial Petroleum and Dynagas LNG 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 Imperial Petroleum with a short position of Dynagas LNG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Petroleum and Dynagas LNG.
Diversification Opportunities for Imperial Petroleum and Dynagas LNG
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Imperial and Dynagas is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Petroleum and Dynagas LNG Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynagas LNG Partners and Imperial Petroleum 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 Imperial Petroleum are associated (or correlated) with Dynagas LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynagas LNG Partners has no effect on the direction of Imperial Petroleum i.e., Imperial Petroleum and Dynagas LNG go up and down completely randomly.
Pair Corralation between Imperial Petroleum and Dynagas LNG
Given the investment horizon of 90 days Imperial Petroleum is expected to generate 6.0 times more return on investment than Dynagas LNG. However, Imperial Petroleum is 6.0 times more volatile than Dynagas LNG Partners. It trades about 0.02 of its potential returns per unit of risk. Dynagas LNG Partners is currently generating about 0.07 per unit of risk. If you would invest 354.00 in Imperial Petroleum on August 27, 2024 and sell it today you would lose (17.00) from holding Imperial Petroleum or give up 4.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Imperial Petroleum vs. Dynagas LNG Partners
Performance |
| Timeline |
| Imperial Petroleum |
| Dynagas LNG Partners |
Imperial Petroleum and Dynagas LNG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Imperial Petroleum and Dynagas LNG
The main advantage of trading using opposite Imperial Petroleum and Dynagas LNG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imperial Petroleum position performs unexpectedly, Dynagas LNG 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 Dynagas LNG will offset losses from the drop in Dynagas LNG's long position.| Imperial Petroleum vs. Western Midstream Partners | Imperial Petroleum vs. DT Midstream | Imperial Petroleum vs. MPLX LP | Imperial Petroleum vs. BP Prudhoe Bay |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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