Correlation Between East Side and Pembina Pipeline

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

Diversification Opportunities for East Side and Pembina Pipeline

-0.34
  Correlation Coefficient

Very good diversification

The 3 months correlation between East and Pembina is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding East Side Games 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 East Side 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 East Side Games 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 East Side i.e., East Side and Pembina Pipeline go up and down completely randomly.

Pair Corralation between East Side and Pembina Pipeline

Assuming the 90 days trading horizon East Side Games is expected to under-perform the Pembina Pipeline. In addition to that, East Side is 5.48 times more volatile than Pembina Pipeline Corp. It trades about -0.01 of its total potential returns per unit of risk. Pembina Pipeline Corp is currently generating about 0.14 per unit of volatility. If you would invest  4,966  in Pembina Pipeline Corp on September 5, 2024 and sell it today you would earn a total of  686.00  from holding Pembina Pipeline Corp or generate 13.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

East Side Games  vs.  Pembina Pipeline Corp

 Performance 
       Timeline  
East Side Games 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days East Side Games has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
Pembina Pipeline Corp 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Pembina Pipeline Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Pembina Pipeline is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

East Side and Pembina Pipeline Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with East Side and Pembina Pipeline

The main advantage of trading using opposite East Side and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Side 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 East Side Games 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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