Correlation Between Nufarm and Pembina Pipeline
Can any of the company-specific risk be diversified away by investing in both Nufarm 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 Nufarm and Pembina Pipeline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nufarm Limited and Pembina Pipeline Corp, you can compare the effects of market volatilities on Nufarm 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 Nufarm with a short position of Pembina Pipeline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm and Pembina Pipeline.
Diversification Opportunities for Nufarm and Pembina Pipeline
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nufarm and Pembina is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm Limited 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 Nufarm 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 Nufarm Limited 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 Nufarm i.e., Nufarm and Pembina Pipeline go up and down completely randomly.
Pair Corralation between Nufarm and Pembina Pipeline
Assuming the 90 days horizon Nufarm Limited is expected to under-perform the Pembina Pipeline. In addition to that, Nufarm is 1.47 times more volatile than Pembina Pipeline Corp. It trades about -0.03 of its total potential returns per unit of risk. Pembina Pipeline Corp is currently generating about 0.07 per unit of volatility. If you would invest 2,796 in Pembina Pipeline Corp on August 28, 2024 and sell it today you would earn a total of 1,290 from holding Pembina Pipeline Corp or generate 46.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nufarm Limited vs. Pembina Pipeline Corp
Performance |
| Timeline |
| Nufarm Limited |
| Pembina Pipeline Corp |
Nufarm and Pembina Pipeline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nufarm and Pembina Pipeline
The main advantage of trading using opposite Nufarm and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nufarm 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.| Nufarm vs. Superior Plus Corp | Nufarm vs. NMI Holdings | Nufarm vs. Origin Agritech | Nufarm vs. SIVERS SEMICONDUCTORS AB |
| Pembina Pipeline vs. Kinder Morgan | Pembina Pipeline vs. The Williams Companies | Pembina Pipeline vs. ONEOK Inc |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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