Correlation Between Pembina Pipeline and Methode Electronics
Can any of the company-specific risk be diversified away by investing in both Pembina Pipeline and Methode Electronics 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 Methode Electronics 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 Methode Electronics, you can compare the effects of market volatilities on Pembina Pipeline and Methode Electronics 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 Methode Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembina Pipeline and Methode Electronics.
Diversification Opportunities for Pembina Pipeline and Methode Electronics
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pembina and Methode is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics 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 Methode Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methode Electronics has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and Methode Electronics go up and down completely randomly.
Pair Corralation between Pembina Pipeline and Methode Electronics
Assuming the 90 days horizon Pembina Pipeline Corp is expected to generate 0.22 times more return on investment than Methode Electronics. However, Pembina Pipeline Corp is 4.63 times less risky than Methode Electronics. It trades about 0.08 of its potential returns per unit of risk. Methode Electronics is currently generating about -0.01 per unit of risk. If you would invest 2,942 in Pembina Pipeline Corp on October 27, 2024 and sell it today you would earn a total of 609.00 from holding Pembina Pipeline Corp or generate 20.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pembina Pipeline Corp vs. Methode Electronics
Performance |
| Timeline |
| Pembina Pipeline Corp |
| Methode Electronics |
Pembina Pipeline and Methode Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pembina Pipeline and Methode Electronics
The main advantage of trading using opposite Pembina Pipeline and Methode Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline position performs unexpectedly, Methode Electronics 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 Methode Electronics will offset losses from the drop in Methode Electronics' long position.| Pembina Pipeline vs. CAL MAINE FOODS | Pembina Pipeline vs. Molson Coors Beverage | Pembina Pipeline vs. OPKO HEALTH | Pembina Pipeline vs. National Beverage Corp |
| Methode Electronics vs. BRIT AMER TOBACCO | Methode Electronics vs. BE Semiconductor Industries | Methode Electronics vs. NORTHEAST UTILITIES | Methode Electronics vs. JAPAN TOBACCO UNSPADR12 |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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