Correlation Between Pembina Pipeline and Magellan Midstream

Can any of the company-specific risk be diversified away by investing in both Pembina Pipeline and Magellan Midstream 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 Magellan Midstream 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 Magellan Midstream Partners, you can compare the effects of market volatilities on Pembina Pipeline and Magellan Midstream 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 Magellan Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembina Pipeline and Magellan Midstream.

Diversification Opportunities for Pembina Pipeline and Magellan Midstream

0.0

Correlation Coefficient

Pembina Pipeline  Magellan Midstream

Pay attention - limited upside

The 3 months correlation between Pembina and Magellan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and Magellan Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Midstream 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 Magellan Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magellan Midstream has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and Magellan Midstream go up and down completely randomly.

Pair Corralation between Pembina Pipeline and Magellan Midstream

If you would invest  3,631  in Pembina Pipeline Corp on December 29, 2024 and sell it today you would earn a total of  356.00  from holding Pembina Pipeline Corp or generate 9.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Pembina Pipeline Corp  vs.  Magellan Midstream Partners

Pembina Pipeline Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pembina Pipeline Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental drivers, Pembina Pipeline may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Magellan Midstream

Risk-Adjusted Performance

Very Weak

Over the last 90 days Magellan Midstream Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, Magellan Midstream is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Pembina Pipeline and Magellan Midstream

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

The idea behind Pembina Pipeline Corp and Magellan Midstream Partners 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.