Correlation Between Pembina Pipeline and Nucor
Can any of the company-specific risk be diversified away by investing in both Pembina Pipeline and Nucor 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 Nucor 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 Nucor, you can compare the effects of market volatilities on Pembina Pipeline and Nucor 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 Nucor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembina Pipeline and Nucor.
Diversification Opportunities for Pembina Pipeline and Nucor
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pembina and Nucor is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and Nucor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nucor 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 Nucor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nucor has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and Nucor go up and down completely randomly.
Pair Corralation between Pembina Pipeline and Nucor
Assuming the 90 days horizon Pembina Pipeline Corp is expected to generate 0.55 times more return on investment than Nucor. However, Pembina Pipeline Corp is 1.82 times less risky than Nucor. It trades about 0.05 of its potential returns per unit of risk. Nucor is currently generating about -0.02 per unit of risk. If you would invest 2,708 in Pembina Pipeline Corp on September 26, 2024 and sell it today you would earn a total of 766.00 from holding Pembina Pipeline Corp or generate 28.29% 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. Nucor
Performance |
| Timeline |
| Pembina Pipeline Corp |
| Nucor |
Pembina Pipeline and Nucor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pembina Pipeline and Nucor
The main advantage of trading using opposite Pembina Pipeline and Nucor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline position performs unexpectedly, Nucor 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 Nucor will offset losses from the drop in Nucor's long position.| Pembina Pipeline vs. Flowers Foods | Pembina Pipeline vs. JJ SNACK FOODS | Pembina Pipeline vs. CAL MAINE FOODS | Pembina Pipeline vs. SOLSTAD OFFSHORE NK |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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