Correlation Between British American and Pembina Pipeline
Can any of the company-specific risk be diversified away by investing in both British American 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 British American and Pembina Pipeline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between British American Tobacco and Pembina Pipeline Corp, you can compare the effects of market volatilities on British American 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 British American with a short position of Pembina Pipeline. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and Pembina Pipeline.
Diversification Opportunities for British American and Pembina Pipeline
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between British and Pembina is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco 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 British American 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 British American Tobacco 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 British American i.e., British American and Pembina Pipeline go up and down completely randomly.
Pair Corralation between British American and Pembina Pipeline
Assuming the 90 days trading horizon British American Tobacco is expected to generate 0.82 times more return on investment than Pembina Pipeline. However, British American Tobacco is 1.23 times less risky than Pembina Pipeline. It trades about 0.09 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 3,166 in British American Tobacco on October 25, 2024 and sell it today you would earn a total of 340.00 from holding British American Tobacco or generate 10.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. Pembina Pipeline Corp
Performance |
| Timeline |
| British American Tobacco |
| Pembina Pipeline Corp |
British American and Pembina Pipeline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and Pembina Pipeline
The main advantage of trading using opposite British American and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American 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.| British American vs. FIREWEED METALS P | British American vs. CARDINAL HEALTH | British American vs. GREENX METALS LTD | British American vs. Cardinal Health |
| Pembina Pipeline vs. TC Energy | Pembina Pipeline vs. Cheniere Energy | Pembina Pipeline vs. Kinder Morgan | Pembina Pipeline vs. The Williams Companies |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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