Correlation Between Imperial Petroleum and CBL International
Can any of the company-specific risk be diversified away by investing in both Imperial Petroleum and CBL International 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 CBL International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Imperial Petroleum Preferred and CBL International Limited, you can compare the effects of market volatilities on Imperial Petroleum and CBL International 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 CBL International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Petroleum and CBL International.
Diversification Opportunities for Imperial Petroleum and CBL International
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Imperial and CBL is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Petroleum Preferred and CBL International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBL International 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 Preferred are associated (or correlated) with CBL International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBL International has no effect on the direction of Imperial Petroleum i.e., Imperial Petroleum and CBL International go up and down completely randomly.
Pair Corralation between Imperial Petroleum and CBL International
Assuming the 90 days horizon Imperial Petroleum is expected to generate 3.63 times less return on investment than CBL International. But when comparing it to its historical volatility, Imperial Petroleum Preferred is 4.1 times less risky than CBL International. It trades about 0.11 of its potential returns per unit of risk. CBL International Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 94.00 in CBL International Limited on August 27, 2024 and sell it today you would earn a total of 5.00 from holding CBL International Limited or generate 5.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Imperial Petroleum Preferred vs. CBL International Limited
Performance |
| Timeline |
| Imperial Petroleum |
| CBL International |
Imperial Petroleum and CBL International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Imperial Petroleum and CBL International
The main advantage of trading using opposite Imperial Petroleum and CBL International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imperial Petroleum position performs unexpectedly, CBL International 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 CBL International will offset losses from the drop in CBL International's long position.| Imperial Petroleum vs. Imperial Petroleum | Imperial Petroleum vs. Dynagas LNG Partners | Imperial Petroleum vs. GasLog Partners LP | Imperial Petroleum vs. GasLog Partners LP |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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