Correlation Between Financial and Pembina Pipeline
Can any of the company-specific risk be diversified away by investing in both Financial 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 Financial and Pembina Pipeline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial 15 Split and Pembina Pipeline Corp, you can compare the effects of market volatilities on Financial 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 Financial with a short position of Pembina Pipeline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial and Pembina Pipeline.
Diversification Opportunities for Financial and Pembina Pipeline
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Financial and Pembina is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Financial 15 Split 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 Financial 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 Financial 15 Split 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 Financial i.e., Financial and Pembina Pipeline go up and down completely randomly.
Pair Corralation between Financial and Pembina Pipeline
Assuming the 90 days trading horizon Financial 15 Split is expected to generate 0.2 times more return on investment than Pembina Pipeline. However, Financial 15 Split is 4.88 times less risky than Pembina Pipeline. It trades about 0.67 of its potential returns per unit of risk. Pembina Pipeline Corp is currently generating about -0.02 per unit of risk. If you would invest 1,064 in Financial 15 Split on November 7, 2024 and sell it today you would earn a total of 36.00 from holding Financial 15 Split or generate 3.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial 15 Split vs. Pembina Pipeline Corp
Performance |
| Timeline |
| Financial 15 Split |
| Pembina Pipeline Corp |
Financial and Pembina Pipeline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial and Pembina Pipeline
The main advantage of trading using opposite Financial and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial 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.| Financial vs. North American Financial | Financial vs. Dividend 15 Split | Financial vs. Dividend Growth Split | Financial vs. Dividend 15 Split |
| Pembina Pipeline vs. E L Financial Corp | Pembina Pipeline vs. Olympia Financial Group | Pembina Pipeline vs. Fairfax Financial Holdings | Pembina Pipeline vs. First National Financial |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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