Correlation Between Imperial Petroleum and Green Plains

Can any of the company-specific risk be diversified away by investing in both Imperial Petroleum and Green Plains 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 Green Plains 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 Green Plains Partners, you can compare the effects of market volatilities on Imperial Petroleum and Green Plains 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 Green Plains. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Petroleum and Green Plains.

Diversification Opportunities for Imperial Petroleum and Green Plains

0.15

Correlation Coefficient

Imperial Petroleum  Green Plains

Average diversification

The 3 months correlation between Imperial and Green is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Petroleum Preferred and Green Plains Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Plains Partners 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 Green Plains. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Plains Partners has no effect on the direction of Imperial Petroleum i.e., Imperial Petroleum and Green Plains go up and down completely randomly.

Pair Corralation between Imperial Petroleum and Green Plains

Assuming the 90 days horizon Imperial Petroleum is expected to generate 1.87 times less return on investment than Green Plains. But when comparing it to its historical volatility, Imperial Petroleum Preferred is 1.18 times less risky than Green Plains. It trades about 0.08 of its potential returns per unit of risk. Green Plains Partners is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,206  in Green Plains Partners on October 5, 2024 and sell it today you would earn a total of  210.00  from holding Green Plains Partners or generate 17.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	20.04%
Values	Daily Returns

Imperial Petroleum Preferred  vs.  Green Plains Partners

Imperial Petroleum

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Imperial Petroleum Preferred are ranked lower than 3 (%) 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.

Green Plains Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Green Plains Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Green Plains is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Imperial Petroleum and Green Plains

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

The idea behind Imperial Petroleum Preferred and Green Plains Partners 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.