Correlation Between Aristocrat Leisure and Pembina Pipeline
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and Pembina Pipeline 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 Aristocrat Leisure and Pembina Pipeline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure Limited and Pembina Pipeline Corp, you can compare the effects of market volatilities on Aristocrat Leisure and Pembina Pipeline 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 Aristocrat Leisure with a short position of Pembina Pipeline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Pembina Pipeline.
Diversification Opportunities for Aristocrat Leisure and Pembina Pipeline
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aristocrat and Pembina is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure Limited and Pembina Pipeline Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pembina Pipeline Corp and Aristocrat Leisure 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 Aristocrat Leisure Limited are associated (or correlated) with Pembina Pipeline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pembina Pipeline Corp has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and Pembina Pipeline go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Pembina Pipeline
Assuming the 90 days horizon Aristocrat Leisure Limited is expected to generate 1.45 times more return on investment than Pembina Pipeline. However, Aristocrat Leisure is 1.45 times more volatile than Pembina Pipeline Corp. It trades about 0.09 of its potential returns per unit of risk. Pembina Pipeline Corp is currently generating about 0.05 per unit of risk. If you would invest 2,148 in Aristocrat Leisure Limited on November 2, 2024 and sell it today you would earn a total of 2,092 from holding Aristocrat Leisure Limited or generate 97.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aristocrat Leisure Limited vs. Pembina Pipeline Corp
Performance |
| Timeline |
| Aristocrat Leisure |
| Pembina Pipeline Corp |
Aristocrat Leisure and Pembina Pipeline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and Pembina Pipeline
The main advantage of trading using opposite Aristocrat Leisure and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure position performs unexpectedly, Pembina Pipeline 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 Pembina Pipeline will offset losses from the drop in Pembina Pipeline's long position.| Aristocrat Leisure vs. Guangdong Investment Limited | Aristocrat Leisure vs. AWILCO DRILLING PLC | Aristocrat Leisure vs. Scientific Games | Aristocrat Leisure vs. PennantPark Investment |
| Pembina Pipeline vs. PNC Financial Services | Pembina Pipeline vs. Prosiebensat 1 Media | Pembina Pipeline vs. OAKTRSPECLENDNEW | Pembina Pipeline vs. ANTA SPORTS PRODUCT |
Check out your portfolio center.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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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