Correlation Between Forward Water and Pembina Pipeline

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Can any of the company-specific risk be diversified away by investing in both Forward Water 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 Forward Water and Pembina Pipeline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forward Water Technologies and Pembina Pipeline Corp, you can compare the effects of market volatilities on Forward Water 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 Forward Water with a short position of Pembina Pipeline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forward Water and Pembina Pipeline.

Diversification Opportunities for Forward Water and Pembina Pipeline

ForwardPembinaDiversified AwayForwardPembinaDiversified Away100%
-0.5
  Correlation Coefficient

Very good diversification

The 3 months correlation between Forward and Pembina is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Forward Water Technologies 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 Forward Water 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 Forward Water Technologies 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 Forward Water i.e., Forward Water and Pembina Pipeline go up and down completely randomly.

Pair Corralation between Forward Water and Pembina Pipeline

Assuming the 90 days trading horizon Forward Water Technologies is expected to generate 9.97 times more return on investment than Pembina Pipeline. However, Forward Water is 9.97 times more volatile than Pembina Pipeline Corp. It trades about 0.02 of its potential returns per unit of risk. Pembina Pipeline Corp is currently generating about -0.01 per unit of risk. If you would invest  10.00  in Forward Water Technologies on September 14, 2024 and sell it today you would lose (1.00) from holding Forward Water Technologies or give up 10.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Forward Water Technologies  vs.  Pembina Pipeline Corp

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -30-20-1001020
JavaScript chart by amCharts 3.21.15FWTC PPL
       Timeline  
Forward Water Techno 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Forward Water Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Forward Water showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec0.060.070.080.090.10.110.12
Pembina Pipeline Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Pembina Pipeline Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Pembina Pipeline is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec555657585960

Forward Water and Pembina Pipeline Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-28.5-21.34-14.19-7.040.037.1214.3621.5928.83 0.10.20.30.4
JavaScript chart by amCharts 3.21.15FWTC PPL
       Returns  

Pair Trading with Forward Water and Pembina Pipeline

The main advantage of trading using opposite Forward Water and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forward Water 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 Forward Water Technologies 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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