Correlation Between Pembina Pipeline and Fortis
Can any of the company-specific risk be diversified away by investing in both Pembina Pipeline and Fortis 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 Fortis 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 Fortis Inc, you can compare the effects of market volatilities on Pembina Pipeline and Fortis 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 Fortis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembina Pipeline and Fortis.
Diversification Opportunities for Pembina Pipeline and Fortis
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pembina and Fortis is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and Fortis Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortis Inc 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 Fortis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortis Inc has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and Fortis go up and down completely randomly.
Pair Corralation between Pembina Pipeline and Fortis
Assuming the 90 days trading horizon Pembina Pipeline is expected to generate 5.06 times less return on investment than Fortis. But when comparing it to its historical volatility, Pembina Pipeline Corp is 1.87 times less risky than Fortis. It trades about 0.06 of its potential returns per unit of risk. Fortis Inc is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 5,962 in Fortis Inc on November 3, 2024 and sell it today you would earn a total of 228.00 from holding Fortis Inc or generate 3.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pembina Pipeline Corp vs. Fortis Inc
Performance |
| Timeline |
| Pembina Pipeline Corp |
| Fortis Inc |
Pembina Pipeline and Fortis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pembina Pipeline and Fortis
The main advantage of trading using opposite Pembina Pipeline and Fortis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline position performs unexpectedly, Fortis 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 Fortis will offset losses from the drop in Fortis' long position.| Pembina Pipeline vs. Pembina Pipeline Corp | Pembina Pipeline vs. Pembina Pipeline Corp | Pembina Pipeline vs. Pembina Pipeline Corp | Pembina Pipeline vs. Pembina Pipeline Corp |
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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