Correlation Between Pembina Pipeline and Elanco Animal
Can any of the company-specific risk be diversified away by investing in both Pembina Pipeline and Elanco Animal 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 Elanco Animal 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 Elanco Animal Health, you can compare the effects of market volatilities on Pembina Pipeline and Elanco Animal 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 Elanco Animal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembina Pipeline and Elanco Animal.
Diversification Opportunities for Pembina Pipeline and Elanco Animal
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pembina and Elanco is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and Elanco Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elanco Animal Health 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 Elanco Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elanco Animal Health has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and Elanco Animal go up and down completely randomly.
Pair Corralation between Pembina Pipeline and Elanco Animal
Assuming the 90 days horizon Pembina Pipeline Corp is expected to generate 0.41 times more return on investment than Elanco Animal. However, Pembina Pipeline Corp is 2.45 times less risky than Elanco Animal. It trades about 0.06 of its potential returns per unit of risk. Elanco Animal Health is currently generating about 0.02 per unit of risk. If you would invest 2,746 in Pembina Pipeline Corp on September 5, 2024 and sell it today you would earn a total of 1,069 from holding Pembina Pipeline Corp or generate 38.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pembina Pipeline Corp vs. Elanco Animal Health
Performance |
| Timeline |
| Pembina Pipeline Corp |
| Elanco Animal Health |
Pembina Pipeline and Elanco Animal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pembina Pipeline and Elanco Animal
The main advantage of trading using opposite Pembina Pipeline and Elanco Animal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline position performs unexpectedly, Elanco Animal 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 Elanco Animal will offset losses from the drop in Elanco Animal's long position.| Pembina Pipeline vs. Austevoll Seafood ASA | Pembina Pipeline vs. CarsalesCom | Pembina Pipeline vs. Geely Automobile Holdings | Pembina Pipeline vs. INTER CARS SA |
| Elanco Animal vs. Takeda Pharmaceutical | Elanco Animal vs. Superior Plus Corp | Elanco Animal vs. Origin Agritech | Elanco Animal vs. Identiv |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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