Correlation Between Pembina Pipeline and Sage Potash
Can any of the company-specific risk be diversified away by investing in both Pembina Pipeline and Sage Potash 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 Sage Potash 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 Sage Potash Corp, you can compare the effects of market volatilities on Pembina Pipeline and Sage Potash 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 Sage Potash. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembina Pipeline and Sage Potash.
Diversification Opportunities for Pembina Pipeline and Sage Potash
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pembina and Sage is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and Sage Potash Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sage Potash Corp 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 Sage Potash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sage Potash Corp has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and Sage Potash go up and down completely randomly.
Pair Corralation between Pembina Pipeline and Sage Potash
Assuming the 90 days trading horizon Pembina Pipeline is expected to generate 2.34 times less return on investment than Sage Potash. But when comparing it to its historical volatility, Pembina Pipeline Corp is 10.02 times less risky than Sage Potash. It trades about 0.1 of its potential returns per unit of risk. Sage Potash Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 28.00 in Sage Potash Corp on August 26, 2024 and sell it today you would lose (10.00) from holding Sage Potash Corp or give up 35.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pembina Pipeline Corp vs. Sage Potash Corp
Performance |
| Timeline |
| Pembina Pipeline Corp |
| Sage Potash Corp |
Pembina Pipeline and Sage Potash Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pembina Pipeline and Sage Potash
The main advantage of trading using opposite Pembina Pipeline and Sage Potash positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline position performs unexpectedly, Sage Potash 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 Sage Potash will offset losses from the drop in Sage Potash's long position.| Pembina Pipeline vs. Enbridge Pref 5 | Pembina Pipeline vs. E Split Corp | Pembina Pipeline vs. E Split Corp | Pembina Pipeline vs. Sage Potash Corp |
| Sage Potash vs. Uniteds Limited | Sage Potash vs. E L Financial Corp | Sage Potash vs. Canadian General Investments | Sage Potash vs. Clairvest Group |
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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