Correlation Between Pembina Pipeline and NorAm Drilling
Can any of the company-specific risk be diversified away by investing in both Pembina Pipeline and NorAm Drilling 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 NorAm Drilling 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 NorAm Drilling AS, you can compare the effects of market volatilities on Pembina Pipeline and NorAm Drilling 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 NorAm Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembina Pipeline and NorAm Drilling.
Diversification Opportunities for Pembina Pipeline and NorAm Drilling
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pembina and NorAm is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and NorAm Drilling AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorAm Drilling AS 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 NorAm Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorAm Drilling AS has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and NorAm Drilling go up and down completely randomly.
Pair Corralation between Pembina Pipeline and NorAm Drilling
Assuming the 90 days horizon Pembina Pipeline is expected to generate 12.33 times less return on investment than NorAm Drilling. But when comparing it to its historical volatility, Pembina Pipeline Corp is 3.57 times less risky than NorAm Drilling. It trades about 0.05 of its potential returns per unit of risk. NorAm Drilling AS is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 16.00 in NorAm Drilling AS on November 2, 2024 and sell it today you would earn a total of 282.00 from holding NorAm Drilling AS or generate 1762.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.4% |
| Values | Daily Returns |
Pembina Pipeline Corp vs. NorAm Drilling AS
Performance |
| Timeline |
| Pembina Pipeline Corp |
| NorAm Drilling AS |
Pembina Pipeline and NorAm Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pembina Pipeline and NorAm Drilling
The main advantage of trading using opposite Pembina Pipeline and NorAm Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline position performs unexpectedly, NorAm Drilling 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 NorAm Drilling will offset losses from the drop in NorAm Drilling's long position.| Pembina Pipeline vs. PNC Financial Services | Pembina Pipeline vs. Prosiebensat 1 Media | Pembina Pipeline vs. OAKTRSPECLENDNEW | Pembina Pipeline vs. ANTA SPORTS PRODUCT |
| NorAm Drilling vs. Iridium Communications | NorAm Drilling vs. CarsalesCom | NorAm Drilling vs. Chunghwa Telecom Co | NorAm Drilling vs. Lamar Advertising |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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