Correlation Between Pembina Pipeline and Keg Royalties
Can any of the company-specific risk be diversified away by investing in both Pembina Pipeline and Keg Royalties 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 Keg Royalties 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 The Keg Royalties, you can compare the effects of market volatilities on Pembina Pipeline and Keg Royalties 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 Keg Royalties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembina Pipeline and Keg Royalties.
Diversification Opportunities for Pembina Pipeline and Keg Royalties
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pembina and Keg is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and The Keg Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keg Royalties 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 Keg Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keg Royalties has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and Keg Royalties go up and down completely randomly.
Pair Corralation between Pembina Pipeline and Keg Royalties
Assuming the 90 days trading horizon Pembina Pipeline Corp is expected to under-perform the Keg Royalties. But the preferred stock apears to be less risky and, when comparing its historical volatility, Pembina Pipeline Corp is 3.04 times less risky than Keg Royalties. The preferred stock trades about -0.23 of its potential returns per unit of risk. The The Keg Royalties is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,389 in The Keg Royalties on December 5, 2024 and sell it today you would earn a total of 9.00 from holding The Keg Royalties or generate 0.65% 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. The Keg Royalties
Performance |
| Timeline |
| Pembina Pipeline Corp |
| Keg Royalties |
Pembina Pipeline and Keg Royalties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pembina Pipeline and Keg Royalties
The main advantage of trading using opposite Pembina Pipeline and Keg Royalties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline position performs unexpectedly, Keg Royalties 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 Keg Royalties will offset losses from the drop in Keg Royalties' long position.| Pembina Pipeline vs. Pembina Pipeline Corp | ||
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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