Correlation Between Imperial Petroleum and International Seaways
Can any of the company-specific risk be diversified away by investing in both Imperial Petroleum and International Seaways 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 International Seaways into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Imperial Petroleum and International Seaways, you can compare the effects of market volatilities on Imperial Petroleum and International Seaways 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 International Seaways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Petroleum and International Seaways.
Diversification Opportunities for Imperial Petroleum and International Seaways
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Imperial and International is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Petroleum and International Seaways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Seaways 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 International Seaways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Seaways has no effect on the direction of Imperial Petroleum i.e., Imperial Petroleum and International Seaways go up and down completely randomly.
Pair Corralation between Imperial Petroleum and International Seaways
Given the investment horizon of 90 days Imperial Petroleum is expected to under-perform the International Seaways. But the stock apears to be less risky and, when comparing its historical volatility, Imperial Petroleum is 1.66 times less risky than International Seaways. The stock trades about -0.72 of its potential returns per unit of risk. The International Seaways is currently generating about -0.26 of returns per unit of risk over similar time horizon. If you would invest 4,333 in International Seaways on August 31, 2024 and sell it today you would lose (371.00) from holding International Seaways or give up 8.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Imperial Petroleum vs. International Seaways
Performance |
| Timeline |
| Imperial Petroleum |
| International Seaways |
Imperial Petroleum and International Seaways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Imperial Petroleum and International Seaways
The main advantage of trading using opposite Imperial Petroleum and International Seaways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imperial Petroleum position performs unexpectedly, International Seaways 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 International Seaways will offset losses from the drop in International Seaways' long position.| Imperial Petroleum vs. International Seaways | Imperial Petroleum vs. Ardmore Shpng | Imperial Petroleum vs. Aquagold International | Imperial Petroleum vs. Thrivent High Yield |
| International Seaways vs. Teekay Tankers | International Seaways vs. Frontline | International Seaways vs. DHT Holdings | International Seaways vs. Scorpio 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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