Correlation Between Imperial Petroleum and Nordic American
Can any of the company-specific risk be diversified away by investing in both Imperial Petroleum and Nordic American 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 Nordic American 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 Nordic American Tankers, you can compare the effects of market volatilities on Imperial Petroleum and Nordic American 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 Nordic American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Petroleum and Nordic American.
Diversification Opportunities for Imperial Petroleum and Nordic American
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Imperial and Nordic is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Petroleum Preferred and Nordic American Tankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic American Tankers 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 Nordic American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic American Tankers has no effect on the direction of Imperial Petroleum i.e., Imperial Petroleum and Nordic American go up and down completely randomly.
Pair Corralation between Imperial Petroleum and Nordic American
Assuming the 90 days horizon Imperial Petroleum Preferred is expected to generate 0.4 times more return on investment than Nordic American. However, Imperial Petroleum Preferred is 2.49 times less risky than Nordic American. It trades about 0.16 of its potential returns per unit of risk. Nordic American Tankers is currently generating about -0.25 per unit of risk. If you would invest 2,460 in Imperial Petroleum Preferred on August 24, 2024 and sell it today you would earn a total of 70.00 from holding Imperial Petroleum Preferred or generate 2.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Imperial Petroleum Preferred vs. Nordic American Tankers
Performance |
| Timeline |
| Imperial Petroleum |
| Nordic American Tankers |
Imperial Petroleum and Nordic American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Imperial Petroleum and Nordic American
The main advantage of trading using opposite Imperial Petroleum and Nordic American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imperial Petroleum position performs unexpectedly, Nordic American 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 Nordic American will offset losses from the drop in Nordic American'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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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