Correlation Between Pipestone Energy and International Petroleum

Can any of the company-specific risk be diversified away by investing in both Pipestone Energy and International 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 Pipestone Energy and International Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pipestone Energy Corp and International Petroleum, you can compare the effects of market volatilities on Pipestone Energy and International 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 Pipestone Energy with a short position of International Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pipestone Energy and International Petroleum.

Diversification Opportunities for Pipestone Energy and International Petroleum

0.52

Correlation Coefficient

Pipestone Energy  International Petroleum

Very weak diversification

The 3 months correlation between Pipestone and International is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Pipestone Energy Corp and International Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Petroleum and Pipestone Energy 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 Pipestone Energy Corp are associated (or correlated) with International Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Petroleum has no effect on the direction of Pipestone Energy i.e., Pipestone Energy and International Petroleum go up and down completely randomly.

Pair Corralation between Pipestone Energy and International Petroleum

If you would invest  188.00  in Pipestone Energy Corp on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Pipestone Energy Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Pipestone Energy Corp  vs.  International Petroleum

Pipestone Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pipestone Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Pipestone Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

International Petroleum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Pipestone Energy and International Petroleum

The main advantage of trading using opposite Pipestone Energy and International Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pipestone Energy position performs unexpectedly, International 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 International Petroleum will offset losses from the drop in International Petroleum's long position.

The idea behind Pipestone Energy Corp and International Petroleum pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.