Correlation Between E Split and Pembina Pipeline

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

Diversification Opportunities for E Split and Pembina Pipeline

0.52
  Correlation Coefficient

Very weak diversification

The 3 months correlation between ENS-PA and Pembina is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding E Split Corp 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 E Split 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 E Split Corp 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 E Split i.e., E Split and Pembina Pipeline go up and down completely randomly.

Pair Corralation between E Split and Pembina Pipeline

Assuming the 90 days trading horizon E Split Corp is expected to generate 0.61 times more return on investment than Pembina Pipeline. However, E Split Corp is 1.64 times less risky than Pembina Pipeline. It trades about 0.18 of its potential returns per unit of risk. Pembina Pipeline Corp is currently generating about 0.07 per unit of risk. If you would invest  990.00  in E Split Corp on August 29, 2024 and sell it today you would earn a total of  125.00  from holding E Split Corp or generate 12.63% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

E Split Corp  vs.  Pembina Pipeline Corp

 Performance 
       Timeline  
E Split Corp 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in E Split Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, E Split may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Pembina Pipeline Corp 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Pembina Pipeline Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Pembina Pipeline is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

E Split and Pembina Pipeline Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with E Split and Pembina Pipeline

The main advantage of trading using opposite E Split and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Split 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 E Split Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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