Correlation Between Teekay Tankers and Imperial Petroleum

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

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

Diversification Opportunities for Teekay Tankers and Imperial Petroleum

0.78

Correlation Coefficient

Teekay Tankers  Imperial Petroleum

Poor diversification

The 3 months correlation between Teekay and Imperial is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Teekay Tankers and Imperial Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Petroleum and Teekay Tankers 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 Teekay Tankers 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 Teekay Tankers i.e., Teekay Tankers and Imperial Petroleum go up and down completely randomly.

Pair Corralation between Teekay Tankers and Imperial Petroleum

Considering the 90-day investment horizon Teekay Tankers is expected to generate 0.99 times more return on investment than Imperial Petroleum. However, Teekay Tankers is 1.01 times less risky than Imperial Petroleum. It trades about 0.01 of its potential returns per unit of risk. Imperial Petroleum is currently generating about -0.09 per unit of risk. If you would invest  3,860  in Teekay Tankers on December 29, 2024 and sell it today you would lose (43.00) from holding Teekay Tankers or give up 1.11% of portfolio value over 90 days.

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

Teekay Tankers  vs.  Imperial Petroleum

Teekay Tankers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teekay Tankers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Teekay Tankers is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

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

Pair Trading with Teekay Tankers and Imperial Petroleum

The main advantage of trading using opposite Teekay Tankers and Imperial Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teekay Tankers 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 Teekay Tankers 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.