Correlation Between Insurance Australia and Pembina Pipeline
Can any of the company-specific risk be diversified away by investing in both Insurance Australia 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 Insurance Australia and Pembina Pipeline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insurance Australia Group and Pembina Pipeline Corp, you can compare the effects of market volatilities on Insurance Australia 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 Insurance Australia with a short position of Pembina Pipeline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and Pembina Pipeline.
Diversification Opportunities for Insurance Australia and Pembina Pipeline
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Insurance and Pembina is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia 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 Insurance Australia 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 Insurance Australia 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 Insurance Australia i.e., Insurance Australia and Pembina Pipeline go up and down completely randomly.
Pair Corralation between Insurance Australia and Pembina Pipeline
Assuming the 90 days horizon Insurance Australia is expected to generate 1.55 times less return on investment than Pembina Pipeline. In addition to that, Insurance Australia is 1.16 times more volatile than Pembina Pipeline Corp. It trades about 0.1 of its total potential returns per unit of risk. Pembina Pipeline Corp is currently generating about 0.19 per unit of volatility. If you would invest 3,474 in Pembina Pipeline Corp on October 22, 2024 and sell it today you would earn a total of 112.00 from holding Pembina Pipeline Corp or generate 3.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insurance Australia Group vs. Pembina Pipeline Corp
Performance |
| Timeline |
| Insurance Australia |
| Pembina Pipeline Corp |
Insurance Australia and Pembina Pipeline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and Pembina Pipeline
The main advantage of trading using opposite Insurance Australia and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia 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.| Insurance Australia vs. Kingdee International Software | Insurance Australia vs. IMPERIAL TOBACCO | Insurance Australia vs. Scandinavian Tobacco Group | Insurance Australia vs. BOS BETTER ONLINE |
| Pembina Pipeline vs. Perseus Mining Limited | Pembina Pipeline vs. SBI Insurance Group | Pembina Pipeline vs. ANGLO ASIAN MINING | Pembina Pipeline vs. Insurance Australia Group |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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