Correlation Between Pembina Pipeline and CVS HEALTH
Can any of the company-specific risk be diversified away by investing in both Pembina Pipeline and CVS HEALTH 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 CVS HEALTH 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 CVS HEALTH CDR, you can compare the effects of market volatilities on Pembina Pipeline and CVS HEALTH 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 CVS HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembina Pipeline and CVS HEALTH.
Diversification Opportunities for Pembina Pipeline and CVS HEALTH
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pembina and CVS is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and CVS HEALTH CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS HEALTH CDR 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 CVS HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS HEALTH CDR has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and CVS HEALTH go up and down completely randomly.
Pair Corralation between Pembina Pipeline and CVS HEALTH
Assuming the 90 days trading horizon Pembina Pipeline is expected to generate 27.39 times less return on investment than CVS HEALTH. But when comparing it to its historical volatility, Pembina Pipeline Corp is 2.18 times less risky than CVS HEALTH. It trades about 0.05 of its potential returns per unit of risk. CVS HEALTH CDR is currently generating about 0.61 of returns per unit of risk over similar time horizon. If you would invest 1,080 in CVS HEALTH CDR on October 29, 2024 and sell it today you would earn a total of 276.00 from holding CVS HEALTH CDR or generate 25.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pembina Pipeline Corp vs. CVS HEALTH CDR
Performance |
| Timeline |
| Pembina Pipeline Corp |
| CVS HEALTH CDR |
Pembina Pipeline and CVS HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pembina Pipeline and CVS HEALTH
The main advantage of trading using opposite Pembina Pipeline and CVS HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline position performs unexpectedly, CVS HEALTH 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 CVS HEALTH will offset losses from the drop in CVS HEALTH's long position.| Pembina Pipeline vs. Financial 15 Split | Pembina Pipeline vs. North American Financial | Pembina Pipeline vs. Bank of Nova | Pembina Pipeline vs. MTY Food Group |
| CVS HEALTH vs. Amazon CDR | CVS HEALTH vs. Alphabet Inc CDR | CVS HEALTH vs. Apple Inc CDR | CVS HEALTH vs. Microsoft Corp CDR |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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