Correlation Between Genesis Energy and Imperial Petroleum

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

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

Diversification Opportunities for Genesis Energy and Imperial Petroleum

-0.76

Correlation Coefficient

Genesis Energy  Imperial Petroleum

Pay attention - limited upside

The 3 months correlation between Genesis and Imperial is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Genesis Energy LP and Imperial Petroleum Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Petroleum and Genesis 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 Genesis Energy LP 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 Genesis Energy i.e., Genesis Energy and Imperial Petroleum go up and down completely randomly.

Pair Corralation between Genesis Energy and Imperial Petroleum

Considering the 90-day investment horizon Genesis Energy LP is expected to under-perform the Imperial Petroleum. In addition to that, Genesis Energy is 2.99 times more volatile than Imperial Petroleum Preferred. It trades about -0.17 of its total potential returns per unit of risk. Imperial Petroleum Preferred is currently generating about 0.09 per unit of volatility. If you would invest  2,465  in Imperial Petroleum Preferred on September 25, 2024 and sell it today you would earn a total of  101.00  from holding Imperial Petroleum Preferred or generate 4.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Genesis Energy LP  vs.  Imperial Petroleum Preferred

Genesis Energy LP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genesis Energy LP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Imperial Petroleum

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Imperial Petroleum Preferred are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Imperial Petroleum is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Genesis Energy and Imperial Petroleum

The main advantage of trading using opposite Genesis Energy and Imperial Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genesis Energy 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.

The idea behind Genesis Energy LP and Imperial Petroleum Preferred 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.