Correlation Between Marine Petroleum and Imperial Petroleum

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

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

Diversification Opportunities for Marine Petroleum and Imperial Petroleum

0.07

Correlation Coefficient

Marine Petroleum  Imperial Petroleum

Significant diversification

The 3 months correlation between Marine and Imperial is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Marine Petroleum Trust and Imperial Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Petroleum and Marine 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 Marine Petroleum Trust 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 Marine Petroleum i.e., Marine Petroleum and Imperial Petroleum go up and down completely randomly.

Pair Corralation between Marine Petroleum and Imperial Petroleum

Assuming the 90 days horizon Marine Petroleum Trust is expected to generate 0.84 times more return on investment than Imperial Petroleum. However, Marine Petroleum Trust is 1.19 times less risky than Imperial Petroleum. It trades about 0.04 of its potential returns per unit of risk. Imperial Petroleum is currently generating about -0.11 per unit of risk. If you would invest  385.00  in Marine Petroleum Trust on November 19, 2024 and sell it today you would earn a total of  18.00  from holding Marine Petroleum Trust or generate 4.68% return on investment over 90 days.

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

Marine Petroleum Trust  vs.  Imperial Petroleum

Marine Petroleum Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Marine Petroleum Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Marine Petroleum may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Imperial Petroleum

Risk-Adjusted Performance

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 March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Marine Petroleum and Imperial Petroleum

The main advantage of trading using opposite Marine Petroleum and Imperial Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marine Petroleum 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 Marine Petroleum Trust 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..