Correlation Between Pembina Pipeline and FAST RETAIL
Can any of the company-specific risk be diversified away by investing in both Pembina Pipeline and FAST RETAIL 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 FAST RETAIL 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 FAST RETAIL ADR, you can compare the effects of market volatilities on Pembina Pipeline and FAST RETAIL 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 FAST RETAIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembina Pipeline and FAST RETAIL.
Diversification Opportunities for Pembina Pipeline and FAST RETAIL
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pembina and FAST is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and FAST RETAIL ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAST RETAIL ADR 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 FAST RETAIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAST RETAIL ADR has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and FAST RETAIL go up and down completely randomly.
Pair Corralation between Pembina Pipeline and FAST RETAIL
Assuming the 90 days horizon Pembina Pipeline Corp is expected to generate 0.46 times more return on investment than FAST RETAIL. However, Pembina Pipeline Corp is 2.18 times less risky than FAST RETAIL. It trades about 0.17 of its potential returns per unit of risk. FAST RETAIL ADR is currently generating about 0.06 per unit of risk. If you would invest 2,777 in Pembina Pipeline Corp on August 26, 2024 and sell it today you would earn a total of 1,375 from holding Pembina Pipeline Corp or generate 49.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pembina Pipeline Corp vs. FAST RETAIL ADR
Performance |
| Timeline |
| Pembina Pipeline Corp |
| FAST RETAIL ADR |
Pembina Pipeline and FAST RETAIL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pembina Pipeline and FAST RETAIL
The main advantage of trading using opposite Pembina Pipeline and FAST RETAIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline position performs unexpectedly, FAST RETAIL 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 FAST RETAIL will offset losses from the drop in FAST RETAIL's long position.| Pembina Pipeline vs. Kinder Morgan | Pembina Pipeline vs. The Williams Companies | Pembina Pipeline vs. ONEOK Inc | Pembina Pipeline vs. Targa Resources Corp |
| FAST RETAIL vs. CHEMICAL INDUSTRIES | FAST RETAIL vs. TIANDE CHEMICAL | FAST RETAIL vs. Data3 Limited | FAST RETAIL vs. Soken Chemical Engineering |
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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