Correlation Between Imperial Petroleum and Pembina Pipeline
Can any of the company-specific risk be diversified away by investing in both Imperial Petroleum and Pembina Pipeline 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 Pembina Pipeline 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 Pembina Pipeline Corp, you can compare the effects of market volatilities on Imperial Petroleum and Pembina Pipeline 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 Pembina Pipeline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Petroleum and Pembina Pipeline.
Diversification Opportunities for Imperial Petroleum and Pembina Pipeline
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Imperial and Pembina is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Petroleum Preferred and Pembina Pipeline Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pembina Pipeline Corp 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 Pembina Pipeline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pembina Pipeline Corp has no effect on the direction of Imperial Petroleum i.e., Imperial Petroleum and Pembina Pipeline go up and down completely randomly.
Pair Corralation between Imperial Petroleum and Pembina Pipeline
Assuming the 90 days horizon Imperial Petroleum is expected to generate 1.23 times less return on investment than Pembina Pipeline. But when comparing it to its historical volatility, Imperial Petroleum Preferred is 1.74 times less risky than Pembina Pipeline. It trades about 0.11 of its potential returns per unit of risk. Pembina Pipeline Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,213 in Pembina Pipeline Corp on August 27, 2024 and sell it today you would earn a total of 80.00 from holding Pembina Pipeline Corp or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Imperial Petroleum Preferred vs. Pembina Pipeline Corp
Performance |
| Timeline |
| Imperial Petroleum |
| Pembina Pipeline Corp |
Imperial Petroleum and Pembina Pipeline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Imperial Petroleum and Pembina Pipeline
The main advantage of trading using opposite Imperial Petroleum and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imperial Petroleum position performs unexpectedly, Pembina Pipeline 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 Pembina Pipeline will offset losses from the drop in Pembina Pipeline'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 |
| Pembina Pipeline vs. LTC Properties | Pembina Pipeline vs. Main Street Capital | Pembina Pipeline vs. STAG Industrial | Pembina Pipeline vs. Gladstone Investment |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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