Correlation Between NextSource Materials and Pembina Pipeline
Can any of the company-specific risk be diversified away by investing in both NextSource Materials 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 NextSource Materials and Pembina Pipeline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NextSource Materials and Pembina Pipeline Corp, you can compare the effects of market volatilities on NextSource Materials 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 NextSource Materials with a short position of Pembina Pipeline. Check out your portfolio center. Please also check ongoing floating volatility patterns of NextSource Materials and Pembina Pipeline.
Diversification Opportunities for NextSource Materials and Pembina Pipeline
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NextSource and Pembina is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding NextSource Materials 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 NextSource Materials 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 NextSource Materials 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 NextSource Materials i.e., NextSource Materials and Pembina Pipeline go up and down completely randomly.
Pair Corralation between NextSource Materials and Pembina Pipeline
Assuming the 90 days trading horizon NextSource Materials is expected to under-perform the Pembina Pipeline. In addition to that, NextSource Materials is 2.51 times more volatile than Pembina Pipeline Corp. It trades about -0.18 of its total potential returns per unit of risk. Pembina Pipeline Corp is currently generating about -0.03 per unit of volatility. If you would invest 5,825 in Pembina Pipeline Corp on September 1, 2024 and sell it today you would lose (57.00) from holding Pembina Pipeline Corp or give up 0.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NextSource Materials vs. Pembina Pipeline Corp
Performance |
| Timeline |
| NextSource Materials |
| Pembina Pipeline Corp |
NextSource Materials and Pembina Pipeline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NextSource Materials and Pembina Pipeline
The main advantage of trading using opposite NextSource Materials and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NextSource Materials 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.| NextSource Materials vs. Leading Edge Materials | NextSource Materials vs. Northern Graphite | NextSource Materials vs. Lomiko Metals | NextSource Materials vs. Elcora Advanced Materials |
| Pembina Pipeline vs. Toronto Dominion Bank | Pembina Pipeline vs. North American Financial | Pembina Pipeline vs. Canadian Imperial Bank | Pembina Pipeline vs. Precision Drilling |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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