Correlation Between Algoma Steel and Pembina Pipeline
Can any of the company-specific risk be diversified away by investing in both Algoma Steel 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 Algoma Steel and Pembina Pipeline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Algoma Steel Group and Pembina Pipeline Corp, you can compare the effects of market volatilities on Algoma Steel 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 Algoma Steel with a short position of Pembina Pipeline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Pembina Pipeline.
Diversification Opportunities for Algoma Steel and Pembina Pipeline
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Algoma and Pembina is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group 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 Algoma Steel 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 Algoma Steel Group 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 Algoma Steel i.e., Algoma Steel and Pembina Pipeline go up and down completely randomly.
Pair Corralation between Algoma Steel and Pembina Pipeline
Assuming the 90 days trading horizon Algoma Steel Group is expected to generate 2.31 times more return on investment than Pembina Pipeline. However, Algoma Steel is 2.31 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 -0.03 per unit of risk. If you would invest 1,445 in Algoma Steel Group on September 1, 2024 and sell it today you would earn a total of 57.00 from holding Algoma Steel Group or generate 3.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algoma Steel Group vs. Pembina Pipeline Corp
Performance |
| Timeline |
| Algoma Steel Group |
| Pembina Pipeline Corp |
Algoma Steel and Pembina Pipeline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Pembina Pipeline
The main advantage of trading using opposite Algoma Steel and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel 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.| Algoma Steel vs. First Majestic Silver | Algoma Steel vs. Ivanhoe Energy | Algoma Steel vs. Orezone Gold Corp | Algoma Steel vs. Faraday Copper Corp |
| Pembina Pipeline vs. Toronto Dominion Bank | Pembina Pipeline vs. North American Financial | Pembina Pipeline vs. Canadian Imperial Bank | Pembina Pipeline vs. Precision Drilling |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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