Correlation Between Pembina Pipeline and Lion Biotechnologies
Can any of the company-specific risk be diversified away by investing in both Pembina Pipeline and Lion Biotechnologies 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 Pembina Pipeline and Lion Biotechnologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pembina Pipeline Corp and Lion Biotechnologies, you can compare the effects of market volatilities on Pembina Pipeline and Lion Biotechnologies 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 Pembina Pipeline with a short position of Lion Biotechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembina Pipeline and Lion Biotechnologies.
Diversification Opportunities for Pembina Pipeline and Lion Biotechnologies
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pembina and Lion is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and Lion Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Biotechnologies and Pembina Pipeline 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 Pembina Pipeline Corp are associated (or correlated) with Lion Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Biotechnologies has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and Lion Biotechnologies go up and down completely randomly.
Pair Corralation between Pembina Pipeline and Lion Biotechnologies
Assuming the 90 days horizon Pembina Pipeline Corp is expected to generate 0.2 times more return on investment than Lion Biotechnologies. However, Pembina Pipeline Corp is 5.1 times less risky than Lion Biotechnologies. It trades about 0.13 of its potential returns per unit of risk. Lion Biotechnologies is currently generating about -0.02 per unit of risk. If you would invest 3,193 in Pembina Pipeline Corp on September 3, 2024 and sell it today you would earn a total of 690.00 from holding Pembina Pipeline Corp or generate 21.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pembina Pipeline Corp vs. Lion Biotechnologies
Performance |
| Timeline |
| Pembina Pipeline Corp |
| Lion Biotechnologies |
Pembina Pipeline and Lion Biotechnologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pembina Pipeline and Lion Biotechnologies
The main advantage of trading using opposite Pembina Pipeline and Lion Biotechnologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline position performs unexpectedly, Lion Biotechnologies 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 Lion Biotechnologies will offset losses from the drop in Lion Biotechnologies' long position.| Pembina Pipeline vs. ONEOK Inc | Pembina Pipeline vs. Superior Plus Corp | Pembina Pipeline vs. NMI Holdings | Pembina Pipeline vs. Origin Agritech |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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