Correlation Between Pembina Pipeline and El Paso
Can any of the company-specific risk be diversified away by investing in both Pembina Pipeline and El Paso 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 El Paso 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 El Paso Energy, you can compare the effects of market volatilities on Pembina Pipeline and El Paso 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 El Paso. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembina Pipeline and El Paso.
Diversification Opportunities for Pembina Pipeline and El Paso
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pembina and EP-PC is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and El Paso Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Paso Energy 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 El Paso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Paso Energy has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and El Paso go up and down completely randomly.
Pair Corralation between Pembina Pipeline and El Paso
Considering the 90-day investment horizon Pembina Pipeline Corp is expected to generate 2.26 times more return on investment than El Paso. However, Pembina Pipeline is 2.26 times more volatile than El Paso Energy. It trades about 0.06 of its potential returns per unit of risk. El Paso Energy is currently generating about 0.09 per unit of risk. If you would invest 3,978 in Pembina Pipeline Corp on August 30, 2024 and sell it today you would earn a total of 141.00 from holding Pembina Pipeline Corp or generate 3.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pembina Pipeline Corp vs. El Paso Energy
Performance |
| Timeline |
| Pembina Pipeline Corp |
| El Paso Energy |
Pembina Pipeline and El Paso Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pembina Pipeline and El Paso
The main advantage of trading using opposite Pembina Pipeline and El Paso positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline position performs unexpectedly, El Paso 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 El Paso will offset losses from the drop in El Paso's long position.| Pembina Pipeline vs. LTC Properties | Pembina Pipeline vs. Main Street Capital | Pembina Pipeline vs. STAG Industrial | Pembina Pipeline vs. Gladstone Investment |
| El Paso vs. Dynagas LNG Partners | El Paso vs. GasLog Partners LP | El Paso vs. HUMANA INC | El Paso vs. Aquagold International |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |