Correlation Between Enbridge and Pembina Pipeline
Can any of the company-specific risk be diversified away by investing in both Enbridge 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 Enbridge and Pembina Pipeline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enbridge and Pembina Pipeline Corp, you can compare the effects of market volatilities on Enbridge 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 Enbridge with a short position of Pembina Pipeline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge and Pembina Pipeline.
Diversification Opportunities for Enbridge and Pembina Pipeline
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Enbridge and Pembina is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge 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 Enbridge 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 Enbridge 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 Enbridge i.e., Enbridge and Pembina Pipeline go up and down completely randomly.
Pair Corralation between Enbridge and Pembina Pipeline
Considering the 90-day investment horizon Enbridge is expected to generate 1.47 times less return on investment than Pembina Pipeline. In addition to that, Enbridge is 1.04 times more volatile than Pembina Pipeline Corp. It trades about 0.05 of its total potential returns per unit of risk. Pembina Pipeline Corp is currently generating about 0.07 per unit of volatility. If you would invest 3,121 in Pembina Pipeline Corp on August 27, 2024 and sell it today you would earn a total of 1,172 from holding Pembina Pipeline Corp or generate 37.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enbridge vs. Pembina Pipeline Corp
Performance |
| Timeline |
| Enbridge |
| Pembina Pipeline Corp |
Enbridge and Pembina Pipeline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enbridge and Pembina Pipeline
The main advantage of trading using opposite Enbridge and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge 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.| Enbridge vs. Energy Transfer LP | Enbridge vs. Kinder Morgan | Enbridge vs. MPLX LP | Enbridge vs. Pembina Pipeline Corp |
| Pembina Pipeline vs. LTC Properties | Pembina Pipeline vs. Main Street Capital | Pembina Pipeline vs. STAG Industrial | Pembina Pipeline vs. Gladstone Investment |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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