Correlation Between Champion Iron and Pembina Pipeline

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

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

Diversification Opportunities for Champion Iron and Pembina Pipeline

0.39

Correlation Coefficient

Champion Iron  Pembina Pipeline

Weak diversification

The 3 months correlation between Champion and Pembina is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron 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 Champion Iron 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 Champion Iron 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 Champion Iron i.e., Champion Iron and Pembina Pipeline go up and down completely randomly.

Pair Corralation between Champion Iron and Pembina Pipeline

Assuming the 90 days trading horizon Champion Iron is expected to under-perform the Pembina Pipeline. In addition to that, Champion Iron is 2.47 times more volatile than Pembina Pipeline Corp. It trades about -0.33 of its total potential returns per unit of risk. Pembina Pipeline Corp is currently generating about 0.55 per unit of volatility. If you would invest  2,162  in Pembina Pipeline Corp on October 9, 2024 and sell it today you would earn a total of  134.00  from holding Pembina Pipeline Corp or generate 6.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Champion Iron  vs.  Pembina Pipeline Corp

Champion Iron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Champion Iron has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pembina Pipeline Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pembina Pipeline Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Pembina Pipeline is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Champion Iron and Pembina Pipeline

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

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.