Correlation Between Keyera Corp and Imperial Petroleum

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

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

Diversification Opportunities for Keyera Corp and Imperial Petroleum

0.23

Correlation Coefficient

Keyera Corp  Imperial Petroleum

Modest diversification

The 3 months correlation between Keyera and Imperial is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Keyera Corp and Imperial Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Petroleum and Keyera Corp 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 Keyera 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 Keyera Corp i.e., Keyera Corp and Imperial Petroleum go up and down completely randomly.

Pair Corralation between Keyera Corp and Imperial Petroleum

Assuming the 90 days horizon Keyera Corp is expected to under-perform the Imperial Petroleum. But the pink sheet apears to be less risky and, when comparing its historical volatility, Keyera Corp is 2.81 times less risky than Imperial Petroleum. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Imperial Petroleum is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  284.00  in Imperial Petroleum on October 21, 2024 and sell it today you would earn a total of  13.00  from holding Imperial Petroleum or generate 4.58% return on investment over 90 days.

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

Keyera Corp  vs.  Imperial Petroleum

Keyera Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keyera Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Imperial Petroleum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Imperial Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Keyera Corp and Imperial Petroleum

The main advantage of trading using opposite Keyera Corp and Imperial Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keyera Corp 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 Keyera Corp and Imperial 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.