Correlation Between Cardano and Pembina Pipeline

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Can any of the company-specific risk be diversified away by investing in both Cardano 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 Cardano and Pembina Pipeline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardano and Pembina Pipeline Corp, you can compare the effects of market volatilities on Cardano 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 Cardano with a short position of Pembina Pipeline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardano and Pembina Pipeline.

Diversification Opportunities for Cardano and Pembina Pipeline

0.35
  Correlation Coefficient

Weak diversification

The 3 months correlation between Cardano and Pembina is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cardano 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 Cardano 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 Cardano 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 Cardano i.e., Cardano and Pembina Pipeline go up and down completely randomly.

Pair Corralation between Cardano and Pembina Pipeline

Assuming the 90 days trading horizon Cardano is expected to generate 6.16 times more return on investment than Pembina Pipeline. However, Cardano is 6.16 times more volatile than Pembina Pipeline Corp. It trades about 0.08 of its potential returns per unit of risk. Pembina Pipeline Corp is currently generating about 0.04 per unit of risk. If you would invest  36.00  in Cardano on October 13, 2024 and sell it today you would earn a total of  57.00  from holding Cardano or generate 158.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy60.65%
ValuesDaily Returns

Cardano  vs.  Pembina Pipeline Corp

 Performance 
       Timeline  
Cardano 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Cardano are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Cardano exhibited solid returns over the last few months and may actually be approaching a breakup point.
Pembina Pipeline Corp 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Pembina Pipeline Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Pembina Pipeline is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Cardano and Pembina Pipeline Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cardano and Pembina Pipeline

The main advantage of trading using opposite Cardano and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardano 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.
The idea behind Cardano and Pembina Pipeline Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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