Correlation Between Pembina Pipeline and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both Pembina Pipeline and Sumitomo Mitsui 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 Sumitomo Mitsui 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 Sumitomo Mitsui Construction, you can compare the effects of market volatilities on Pembina Pipeline and Sumitomo Mitsui 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 Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembina Pipeline and Sumitomo Mitsui.
Diversification Opportunities for Pembina Pipeline and Sumitomo Mitsui
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pembina and Sumitomo is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and Sumitomo Mitsui Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Mitsui Cons 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 Sumitomo Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Mitsui Cons has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between Pembina Pipeline and Sumitomo Mitsui
Assuming the 90 days horizon Pembina Pipeline Corp is expected to generate 0.8 times more return on investment than Sumitomo Mitsui. However, Pembina Pipeline Corp is 1.26 times less risky than Sumitomo Mitsui. It trades about 0.21 of its potential returns per unit of risk. Sumitomo Mitsui Construction is currently generating about -0.01 per unit of risk. If you would invest 3,518 in Pembina Pipeline Corp on August 28, 2024 and sell it today you would earn a total of 568.00 from holding Pembina Pipeline Corp or generate 16.15% 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. Sumitomo Mitsui Construction
Performance |
| Timeline |
| Pembina Pipeline Corp |
| Sumitomo Mitsui Cons |
Pembina Pipeline and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pembina Pipeline and Sumitomo Mitsui
The main advantage of trading using opposite Pembina Pipeline and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline position performs unexpectedly, Sumitomo Mitsui 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 Sumitomo Mitsui will offset losses from the drop in Sumitomo Mitsui's long position.| Pembina Pipeline vs. Kinder Morgan | Pembina Pipeline vs. The Williams Companies | Pembina Pipeline vs. ONEOK Inc |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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