Correlation Between Pembina Pipeline and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Pembina Pipeline and Kaiser Aluminum 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 Kaiser Aluminum 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 Kaiser Aluminum, you can compare the effects of market volatilities on Pembina Pipeline and Kaiser Aluminum 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 Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembina Pipeline and Kaiser Aluminum.
Diversification Opportunities for Pembina Pipeline and Kaiser Aluminum
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pembina and Kaiser is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum 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 Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Pembina Pipeline and Kaiser Aluminum
Assuming the 90 days horizon Pembina Pipeline Corp is expected to generate 0.47 times more return on investment than Kaiser Aluminum. However, Pembina Pipeline Corp is 2.14 times less risky than Kaiser Aluminum. It trades about 0.06 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.02 per unit of risk. If you would invest 2,727 in Pembina Pipeline Corp on September 2, 2024 and sell it today you would earn a total of 1,156 from holding Pembina Pipeline Corp or generate 42.39% 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. Kaiser Aluminum
Performance |
| Timeline |
| Pembina Pipeline Corp |
| Kaiser Aluminum |
Pembina Pipeline and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pembina Pipeline and Kaiser Aluminum
The main advantage of trading using opposite Pembina Pipeline and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline position performs unexpectedly, Kaiser Aluminum 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 Kaiser Aluminum will offset losses from the drop in Kaiser Aluminum'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 |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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