Correlation Between CNJ Capital and Pembina Pipeline

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

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

Diversification Opportunities for CNJ Capital and Pembina Pipeline

0.0

Correlation Coefficient

CNJ Capital  Pembina Pipeline

Pay attention - limited upside

The 3 months correlation between CNJ and Pembina is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CNJ Capital Investments 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 CNJ Capital 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 CNJ Capital Investments 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 CNJ Capital i.e., CNJ Capital and Pembina Pipeline go up and down completely randomly.

Pair Corralation between CNJ Capital and Pembina Pipeline

Assuming the 90 days trading horizon CNJ Capital Investments is expected to generate 4.9 times more return on investment than Pembina Pipeline. However, CNJ Capital is 4.9 times more volatile than Pembina Pipeline Corp. It trades about 0.08 of its potential returns per unit of risk. Pembina Pipeline Corp is currently generating about 0.04 per unit of risk. If you would invest  15.00  in CNJ Capital Investments on October 11, 2024 and sell it today you would earn a total of  31.00  from holding CNJ Capital Investments or generate 206.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	78.18%
Values	Daily Returns

CNJ Capital Investments  vs.  Pembina Pipeline Corp

CNJ Capital Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CNJ Capital Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, CNJ Capital is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated 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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CNJ Capital and Pembina Pipeline

The main advantage of trading using opposite CNJ Capital and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNJ Capital 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 CNJ Capital Investments 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.