Correlation Between Tsakos Energy and Imperial Petroleum

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

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

Diversification Opportunities for Tsakos Energy and Imperial Petroleum

0.76

Correlation Coefficient

Tsakos Energy  Imperial Petroleum

Poor diversification

The 3 months correlation between Tsakos and Imperial is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Tsakos Energy Navigation and Imperial Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Petroleum and Tsakos Energy 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 Tsakos Energy Navigation 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 Tsakos Energy i.e., Tsakos Energy and Imperial Petroleum go up and down completely randomly.

Pair Corralation between Tsakos Energy and Imperial Petroleum

Considering the 90-day investment horizon Tsakos Energy Navigation is expected to under-perform the Imperial Petroleum. In addition to that, Tsakos Energy is 1.66 times more volatile than Imperial Petroleum. It trades about -0.37 of its total potential returns per unit of risk. Imperial Petroleum is currently generating about -0.5 per unit of volatility. If you would invest  366.00  in Imperial Petroleum on August 28, 2024 and sell it today you would lose (37.00) from holding Imperial Petroleum or give up 10.11% of portfolio value over 90 days.

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

Tsakos Energy Navigation  vs.  Imperial Petroleum

Tsakos Energy Navigation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tsakos Energy Navigation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

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 uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Tsakos Energy and Imperial Petroleum

The main advantage of trading using opposite Tsakos Energy and Imperial Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tsakos Energy 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 Tsakos Energy Navigation 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.