Correlation Between Exco Technologies and Pembina Pipeline
Can any of the company-specific risk be diversified away by investing in both Exco Technologies 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 Exco Technologies and Pembina Pipeline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exco Technologies Limited and Pembina Pipeline Corp, you can compare the effects of market volatilities on Exco Technologies 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 Exco Technologies with a short position of Pembina Pipeline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exco Technologies and Pembina Pipeline.
Diversification Opportunities for Exco Technologies and Pembina Pipeline
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Exco and Pembina is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Exco Technologies Limited 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 Exco Technologies 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 Exco Technologies Limited 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 Exco Technologies i.e., Exco Technologies and Pembina Pipeline go up and down completely randomly.
Pair Corralation between Exco Technologies and Pembina Pipeline
Assuming the 90 days trading horizon Exco Technologies Limited is expected to under-perform the Pembina Pipeline. But the stock apears to be less risky and, when comparing its historical volatility, Exco Technologies Limited is 1.06 times less risky than Pembina Pipeline. The stock trades about -0.12 of its potential returns per unit of risk. The Pembina Pipeline Corp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 5,852 in Pembina Pipeline Corp on August 29, 2024 and sell it today you would lose (55.00) from holding Pembina Pipeline Corp or give up 0.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exco Technologies Limited vs. Pembina Pipeline Corp
Performance |
| Timeline |
| Exco Technologies |
| Pembina Pipeline Corp |
Exco Technologies and Pembina Pipeline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exco Technologies and Pembina Pipeline
The main advantage of trading using opposite Exco Technologies and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exco Technologies 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.| Exco Technologies vs. Transcontinental | Exco Technologies vs. Methanex | Exco Technologies vs. Stella Jones | Exco Technologies vs. High Liner Foods |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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