Correlation Between PHN Multi and Pembina Pipeline

Can any of the company-specific risk be diversified away by investing in both PHN Multi 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 PHN Multi and Pembina Pipeline into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PHN Multi Style All Cap and Pembina Pipeline Corp, you can compare the effects of market volatilities on PHN Multi 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 PHN Multi with a short position of Pembina Pipeline. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHN Multi and Pembina Pipeline.

Diversification Opportunities for PHN Multi and Pembina Pipeline

0.06

Correlation Coefficient

PHN Multi  Pembina Pipeline

Significant diversification

The 3 months correlation between PHN and Pembina is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding PHN Multi Style All Cap 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 PHN Multi 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 PHN Multi Style All Cap 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 PHN Multi i.e., PHN Multi and Pembina Pipeline go up and down completely randomly.

Pair Corralation between PHN Multi and Pembina Pipeline

Assuming the 90 days trading horizon PHN Multi Style All Cap is expected to generate 1.14 times more return on investment than Pembina Pipeline. However, PHN Multi is 1.14 times more volatile than Pembina Pipeline Corp. It trades about 0.11 of its potential returns per unit of risk. Pembina Pipeline Corp is currently generating about 0.09 per unit of risk. If you would invest  2,825  in PHN Multi Style All Cap on September 22, 2024 and sell it today you would earn a total of  44.00  from holding PHN Multi Style All Cap or generate 1.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

PHN Multi Style All Cap  vs.  Pembina Pipeline Corp

PHN Multi Style

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PHN Multi Style All Cap are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of very weak basic indicators, PHN Multi may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pembina Pipeline Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pembina Pipeline Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Pembina Pipeline is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PHN Multi and Pembina Pipeline

The main advantage of trading using opposite PHN Multi and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PHN Multi 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.

The idea behind PHN Multi Style All Cap and Pembina Pipeline Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.