Correlation Between Imperial Petroleum and Frontline
Can any of the company-specific risk be diversified away by investing in both Imperial Petroleum and Frontline 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 Frontline 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 Frontline, you can compare the effects of market volatilities on Imperial Petroleum and Frontline 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 Frontline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Petroleum and Frontline.
Diversification Opportunities for Imperial Petroleum and Frontline
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Imperial and Frontline is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Petroleum Preferred and Frontline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontline 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 Frontline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontline has no effect on the direction of Imperial Petroleum i.e., Imperial Petroleum and Frontline go up and down completely randomly.
Pair Corralation between Imperial Petroleum and Frontline
Assuming the 90 days horizon Imperial Petroleum Preferred is expected to generate 0.25 times more return on investment than Frontline. However, Imperial Petroleum Preferred is 3.97 times less risky than Frontline. It trades about 0.05 of its potential returns per unit of risk. Frontline is currently generating about -0.18 per unit of risk. If you would invest 2,465 in Imperial Petroleum Preferred on September 25, 2024 and sell it today you would earn a total of 58.00 from holding Imperial Petroleum Preferred or generate 2.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Imperial Petroleum Preferred vs. Frontline
Performance |
Timeline |
Imperial Petroleum |
Frontline |
Imperial Petroleum and Frontline Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Imperial Petroleum and Frontline
The main advantage of trading using opposite Imperial Petroleum and Frontline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imperial Petroleum position performs unexpectedly, Frontline 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 Frontline will offset losses from the drop in Frontline'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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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