Correlation Between Pembina Pipeline and Gladstone Investment

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

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

Diversification Opportunities for Pembina Pipeline and Gladstone Investment

0.46

Correlation Coefficient

Pembina Pipeline  Gladstone Investment

Very weak diversification

The 3 months correlation between Pembina and Gladstone is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment and Pembina Pipeline 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 Pembina Pipeline Corp are associated (or correlated) with Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and Gladstone Investment go up and down completely randomly.

Pair Corralation between Pembina Pipeline and Gladstone Investment

Assuming the 90 days horizon Pembina Pipeline Corp is expected to generate 0.65 times more return on investment than Gladstone Investment. However, Pembina Pipeline Corp is 1.54 times less risky than Gladstone Investment. It trades about 0.09 of its potential returns per unit of risk. Gladstone Investment is currently generating about 0.04 per unit of risk. If you would invest  2,713  in Pembina Pipeline Corp on September 23, 2024 and sell it today you would earn a total of  748.00  from holding Pembina Pipeline Corp or generate 27.57% return on investment over 90 days.

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

Pembina Pipeline Corp  vs.  Gladstone Investment

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 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.

Gladstone Investment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gladstone Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pembina Pipeline and Gladstone Investment

The main advantage of trading using opposite Pembina Pipeline and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline position performs unexpectedly, Gladstone Investment 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 Gladstone Investment will offset losses from the drop in Gladstone Investment's long position.

The idea behind Pembina Pipeline Corp and Gladstone Investment 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.