Correlation Between Pembina Pipeline and British American
Can any of the company-specific risk be diversified away by investing in both Pembina Pipeline and British American 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 British American 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 British American Tobacco, you can compare the effects of market volatilities on Pembina Pipeline and British American 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 British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembina Pipeline and British American.
Diversification Opportunities for Pembina Pipeline and British American
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pembina and British is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco 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 British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and British American go up and down completely randomly.
Pair Corralation between Pembina Pipeline and British American
Assuming the 90 days horizon Pembina Pipeline is expected to generate 1.84 times less return on investment than British American. In addition to that, Pembina Pipeline is 1.23 times more volatile than British American Tobacco. It trades about 0.04 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.09 per unit of volatility. If you would invest 3,166 in British American Tobacco on October 25, 2024 and sell it today you would earn a total of 340.00 from holding British American Tobacco or generate 10.74% 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. British American Tobacco
Performance |
| Timeline |
| Pembina Pipeline Corp |
| British American Tobacco |
Pembina Pipeline and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pembina Pipeline and British American
The main advantage of trading using opposite Pembina Pipeline and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.| Pembina Pipeline vs. TC Energy | Pembina Pipeline vs. Cheniere Energy | Pembina Pipeline vs. Kinder Morgan | Pembina Pipeline vs. The Williams Companies |
| British American vs. FIREWEED METALS P | British American vs. CARDINAL HEALTH | British American vs. GREENX METALS LTD | British American vs. Cardinal Health |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |