Correlation Between Pembina Pipeline and Emera
Can any of the company-specific risk be diversified away by investing in both Pembina Pipeline and Emera 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 Emera 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 Emera Inc, you can compare the effects of market volatilities on Pembina Pipeline and Emera 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 Emera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembina Pipeline and Emera.
Diversification Opportunities for Pembina Pipeline and Emera
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Pembina and Emera is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and Emera Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emera 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 Emera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emera Inc has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and Emera go up and down completely randomly.
Pair Corralation between Pembina Pipeline and Emera
Assuming the 90 days trading horizon Pembina Pipeline Corp is expected to generate 0.9 times more return on investment than Emera. However, Pembina Pipeline Corp is 1.11 times less risky than Emera. It trades about 0.08 of its potential returns per unit of risk. Emera Inc is currently generating about -0.07 per unit of risk. If you would invest 5,904 in Pembina Pipeline Corp on August 25, 2024 and sell it today you would earn a total of 97.00 from holding Pembina Pipeline Corp or generate 1.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pembina Pipeline Corp vs. Emera Inc
Performance |
| Timeline |
| Pembina Pipeline Corp |
| Emera Inc |
Pembina Pipeline and Emera Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pembina Pipeline and Emera
The main advantage of trading using opposite Pembina Pipeline and Emera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline position performs unexpectedly, Emera 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 Emera will offset losses from the drop in Emera's long position.| Pembina Pipeline vs. Trican Well Service | Pembina Pipeline vs. Ensign Energy Services | Pembina Pipeline vs. Calfrac Well Services | Pembina Pipeline vs. Birchcliff Energy |
| Emera vs. Fortis Inc | Emera vs. Canadian Utilities Limited | Emera vs. TC Energy Corp | Emera vs. Capital Power |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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