Correlation Between Pembina Pipeline and Imperial Petroleum
Can any of the company-specific risk be diversified away by investing in both Pembina Pipeline and Imperial Petroleum 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 Pembina Pipeline and Imperial Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pembina Pipeline Corp and Imperial Petroleum Preferred, you can compare the effects of market volatilities on Pembina Pipeline and Imperial Petroleum 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 Pembina Pipeline with a short position of Imperial Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembina Pipeline and Imperial Petroleum.
Diversification Opportunities for Pembina Pipeline and Imperial Petroleum
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pembina and Imperial is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and Imperial Petroleum Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Petroleum and Pembina Pipeline 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 Pembina Pipeline Corp are associated (or correlated) with Imperial Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Petroleum has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and Imperial Petroleum go up and down completely randomly.
Pair Corralation between Pembina Pipeline and Imperial Petroleum
Considering the 90-day investment horizon Pembina Pipeline is expected to generate 1.48 times less return on investment than Imperial Petroleum. But when comparing it to its historical volatility, Pembina Pipeline Corp is 1.22 times less risky than Imperial Petroleum. It trades about 0.06 of its potential returns per unit of risk. Imperial Petroleum Preferred is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,599 in Imperial Petroleum Preferred on August 24, 2024 and sell it today you would earn a total of 931.00 from holding Imperial Petroleum Preferred or generate 58.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pembina Pipeline Corp vs. Imperial Petroleum Preferred
Performance |
| Timeline |
| Pembina Pipeline Corp |
| Imperial Petroleum |
Pembina Pipeline and Imperial Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pembina Pipeline and Imperial Petroleum
The main advantage of trading using opposite Pembina Pipeline and Imperial Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline position performs unexpectedly, Imperial Petroleum 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 Imperial Petroleum will offset losses from the drop in Imperial Petroleum's long position.| Pembina Pipeline vs. LTC Properties | Pembina Pipeline vs. Main Street Capital | Pembina Pipeline vs. STAG Industrial | Pembina Pipeline vs. Gladstone Investment |
| Imperial Petroleum vs. Imperial Petroleum | Imperial Petroleum vs. Dynagas LNG Partners | Imperial Petroleum vs. GasLog Partners LP | Imperial Petroleum vs. GasLog Partners LP |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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