Correlation Between Awilco Drilling and Pembina Pipeline

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

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

Diversification Opportunities for Awilco Drilling and Pembina Pipeline

0.67

Correlation Coefficient

Awilco Drilling  Pembina Pipeline

Poor diversification

The 3 months correlation between Awilco and Pembina is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Awilco Drilling PLC and Pembina Pipeline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pembina Pipeline and Awilco Drilling 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 Awilco Drilling PLC 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 has no effect on the direction of Awilco Drilling i.e., Awilco Drilling and Pembina Pipeline go up and down completely randomly.

Pair Corralation between Awilco Drilling and Pembina Pipeline

Assuming the 90 days horizon Awilco Drilling PLC is expected to under-perform the Pembina Pipeline. In addition to that, Awilco Drilling is 1.5 times more volatile than Pembina Pipeline. It trades about -0.17 of its total potential returns per unit of risk. Pembina Pipeline is currently generating about -0.12 per unit of volatility. If you would invest  1,645  in Pembina Pipeline on October 9, 2024 and sell it today you would lose (62.00) from holding Pembina Pipeline or give up 3.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

Awilco Drilling PLC  vs.  Pembina Pipeline

Awilco Drilling PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Awilco Drilling PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pembina Pipeline

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pembina Pipeline has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Pembina Pipeline is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Awilco Drilling and Pembina Pipeline

The main advantage of trading using opposite Awilco Drilling and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Awilco Drilling 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 Awilco Drilling PLC and Pembina Pipeline 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..