Correlation Between Pembina Pipeline and Brookfield Investments
Can any of the company-specific risk be diversified away by investing in both Pembina Pipeline and Brookfield Investments 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 Brookfield Investments 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 Brookfield Investments, you can compare the effects of market volatilities on Pembina Pipeline and Brookfield Investments 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 Brookfield Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembina Pipeline and Brookfield Investments.
Diversification Opportunities for Pembina Pipeline and Brookfield Investments
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Pembina and Brookfield is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and Brookfield Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Investments 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 Brookfield Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Investments has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and Brookfield Investments go up and down completely randomly.
Pair Corralation between Pembina Pipeline and Brookfield Investments
Assuming the 90 days trading horizon Pembina Pipeline Corp is expected to under-perform the Brookfield Investments. In addition to that, Pembina Pipeline is 1.79 times more volatile than Brookfield Investments. It trades about -0.19 of its total potential returns per unit of risk. Brookfield Investments is currently generating about 0.08 per unit of volatility. If you would invest 2,513 in Brookfield Investments on September 13, 2024 and sell it today you would earn a total of 13.00 from holding Brookfield Investments or generate 0.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 54.55% |
| Values | Daily Returns |
Pembina Pipeline Corp vs. Brookfield Investments
Performance |
| Timeline |
| Pembina Pipeline Corp |
| Brookfield Investments |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Pembina Pipeline and Brookfield Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pembina Pipeline and Brookfield Investments
The main advantage of trading using opposite Pembina Pipeline and Brookfield Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline position performs unexpectedly, Brookfield Investments 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 Brookfield Investments will offset losses from the drop in Brookfield Investments' long position.| Pembina Pipeline vs. Enbridge Pref 5 | Pembina Pipeline vs. Enbridge Pref 11 | Pembina Pipeline vs. Enbridge Pref L | Pembina Pipeline vs. E Split 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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