Correlation Between Pembina Pipeline and BHP Group
Can any of the company-specific risk be diversified away by investing in both Pembina Pipeline and BHP Group 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 BHP Group 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 BHP Group Limited, you can compare the effects of market volatilities on Pembina Pipeline and BHP Group 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 BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembina Pipeline and BHP Group.
Diversification Opportunities for Pembina Pipeline and BHP Group
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Pembina and BHP is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and BHP Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group Limited 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 BHP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHP Group Limited has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and BHP Group go up and down completely randomly.
Pair Corralation between Pembina Pipeline and BHP Group
Assuming the 90 days horizon Pembina Pipeline Corp is expected to under-perform the BHP Group. But the stock apears to be less risky and, when comparing its historical volatility, Pembina Pipeline Corp is 1.2 times less risky than BHP Group. The stock trades about -0.16 of its potential returns per unit of risk. The BHP Group Limited is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 2,590 in BHP Group Limited on September 19, 2024 and sell it today you would lose (128.00) from holding BHP Group Limited or give up 4.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pembina Pipeline Corp vs. BHP Group Limited
Performance |
| Timeline |
| Pembina Pipeline Corp |
| BHP Group Limited |
Pembina Pipeline and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pembina Pipeline and BHP Group
The main advantage of trading using opposite Pembina Pipeline and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline position performs unexpectedly, BHP Group 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 BHP Group will offset losses from the drop in BHP Group's long position.| Pembina Pipeline vs. Ribbon Communications | Pembina Pipeline vs. SALESFORCE INC CDR | Pembina Pipeline vs. GungHo Online Entertainment | Pembina Pipeline vs. Carsales |
| BHP Group vs. SAFETY MEDICAL PROD | BHP Group vs. Apollo Medical Holdings | BHP Group vs. Pembina Pipeline Corp | BHP Group vs. Major Drilling 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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