Correlation Between RETAIL FOOD and Pembina Pipeline
Can any of the company-specific risk be diversified away by investing in both RETAIL FOOD 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 RETAIL FOOD and Pembina Pipeline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RETAIL FOOD GROUP and Pembina Pipeline Corp, you can compare the effects of market volatilities on RETAIL FOOD 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 RETAIL FOOD with a short position of Pembina Pipeline. Check out your portfolio center. Please also check ongoing floating volatility patterns of RETAIL FOOD and Pembina Pipeline.
Diversification Opportunities for RETAIL FOOD and Pembina Pipeline
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between RETAIL and Pembina is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding RETAIL FOOD GROUP 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 RETAIL FOOD 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 RETAIL FOOD GROUP 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 RETAIL FOOD i.e., RETAIL FOOD and Pembina Pipeline go up and down completely randomly.
Pair Corralation between RETAIL FOOD and Pembina Pipeline
Assuming the 90 days trading horizon RETAIL FOOD GROUP is expected to generate 1.68 times more return on investment than Pembina Pipeline. However, RETAIL FOOD is 1.68 times more volatile than Pembina Pipeline Corp. It trades about 0.24 of its potential returns per unit of risk. Pembina Pipeline Corp is currently generating about 0.06 per unit of risk. If you would invest 3.70 in RETAIL FOOD GROUP on August 30, 2024 and sell it today you would earn a total of 0.50 from holding RETAIL FOOD GROUP or generate 13.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RETAIL FOOD GROUP vs. Pembina Pipeline Corp
Performance |
| Timeline |
| RETAIL FOOD GROUP |
| Pembina Pipeline Corp |
RETAIL FOOD and Pembina Pipeline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RETAIL FOOD and Pembina Pipeline
The main advantage of trading using opposite RETAIL FOOD and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RETAIL FOOD 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.| RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc |
| Pembina Pipeline vs. Enbridge | Pembina Pipeline vs. Kinder Morgan | Pembina Pipeline vs. Targa Resources Corp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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