Correlation Between Pembina Pipeline and Hufvudstaden
Can any of the company-specific risk be diversified away by investing in both Pembina Pipeline and Hufvudstaden 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 Hufvudstaden 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 Hufvudstaden AB, you can compare the effects of market volatilities on Pembina Pipeline and Hufvudstaden 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 Hufvudstaden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembina Pipeline and Hufvudstaden.
Diversification Opportunities for Pembina Pipeline and Hufvudstaden
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pembina and Hufvudstaden is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and Hufvudstaden AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hufvudstaden AB 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 Hufvudstaden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hufvudstaden AB has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and Hufvudstaden go up and down completely randomly.
Pair Corralation between Pembina Pipeline and Hufvudstaden
Assuming the 90 days horizon Pembina Pipeline Corp is expected to generate 1.05 times more return on investment than Hufvudstaden. However, Pembina Pipeline is 1.05 times more volatile than Hufvudstaden AB. It trades about 0.03 of its potential returns per unit of risk. Hufvudstaden AB is currently generating about -0.05 per unit of risk. If you would invest 3,860 in Pembina Pipeline Corp on September 1, 2024 and sell it today you would earn a total of 23.00 from holding Pembina Pipeline Corp or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Pembina Pipeline Corp vs. Hufvudstaden AB
Performance |
| Timeline |
| Pembina Pipeline Corp |
| Hufvudstaden AB |
Pembina Pipeline and Hufvudstaden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pembina Pipeline and Hufvudstaden
The main advantage of trading using opposite Pembina Pipeline and Hufvudstaden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline position performs unexpectedly, Hufvudstaden 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 Hufvudstaden will offset losses from the drop in Hufvudstaden's long position.| Pembina Pipeline vs. Superior Plus Corp | Pembina Pipeline vs. NMI Holdings | Pembina Pipeline vs. Origin Agritech | Pembina Pipeline vs. SIVERS SEMICONDUCTORS AB |
| Hufvudstaden vs. Vulcan Materials | Hufvudstaden vs. VULCAN MATERIALS | Hufvudstaden vs. Evolution Mining Limited | Hufvudstaden vs. Martin Marietta Materials |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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