Correlation Between Brompton Split and Pembina Pipeline
Can any of the company-specific risk be diversified away by investing in both Brompton Split and Pembina Pipeline 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 Brompton Split and Pembina Pipeline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brompton Split Banc and Pembina Pipeline Corp, you can compare the effects of market volatilities on Brompton Split and Pembina Pipeline 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 Brompton Split with a short position of Pembina Pipeline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brompton Split and Pembina Pipeline.
Diversification Opportunities for Brompton Split and Pembina Pipeline
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Brompton and Pembina is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Brompton Split Banc and Pembina Pipeline Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pembina Pipeline Corp and Brompton Split 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 Brompton Split Banc are associated (or correlated) with Pembina Pipeline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pembina Pipeline Corp has no effect on the direction of Brompton Split i.e., Brompton Split and Pembina Pipeline go up and down completely randomly.
Pair Corralation between Brompton Split and Pembina Pipeline
Assuming the 90 days trading horizon Brompton Split is expected to generate 1.56 times less return on investment than Pembina Pipeline. But when comparing it to its historical volatility, Brompton Split Banc is 2.07 times less risky than Pembina Pipeline. It trades about 0.09 of its potential returns per unit of risk. Pembina Pipeline Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,128 in Pembina Pipeline Corp on September 14, 2024 and sell it today you would earn a total of 1,366 from holding Pembina Pipeline Corp or generate 33.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Brompton Split Banc vs. Pembina Pipeline Corp
Performance |
| Timeline |
| Brompton Split Banc |
| Pembina Pipeline Corp |
Brompton Split and Pembina Pipeline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brompton Split and Pembina Pipeline
The main advantage of trading using opposite Brompton Split and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brompton Split position performs unexpectedly, Pembina Pipeline 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 Pembina Pipeline will offset losses from the drop in Pembina Pipeline's long position.| Brompton Split vs. Air Canada | Brompton Split vs. Exco Technologies Limited | Brompton Split vs. Medical Facilities | Brompton Split vs. Pioneering Technology Corp |
| Pembina Pipeline vs. Data Communications Management | Pembina Pipeline vs. Falcon Energy Materials | Pembina Pipeline vs. Ocumetics Technology Corp | Pembina Pipeline vs. Sparx Technology |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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