Correlation Between Pembina Pipeline and 718549AB4

Can any of the company-specific risk be diversified away by investing in both Pembina Pipeline and 718549AB4 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 718549AB4 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pembina Pipeline and Phillips 66 Partners, you can compare the effects of market volatilities on Pembina Pipeline and 718549AB4 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 718549AB4. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembina Pipeline and 718549AB4.

Diversification Opportunities for Pembina Pipeline and 718549AB4

-0.19

Correlation Coefficient

Pembina Pipeline  718549AB4

Good diversification

The 3 months correlation between Pembina and 718549AB4 is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline and Phillips 66 Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips 66 Partners 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 are associated (or correlated) with 718549AB4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phillips 66 Partners has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and 718549AB4 go up and down completely randomly.

Pair Corralation between Pembina Pipeline and 718549AB4

Assuming the 90 days horizon Pembina Pipeline is expected to generate 1.83 times more return on investment than 718549AB4. However, Pembina Pipeline is 1.83 times more volatile than Phillips 66 Partners. It trades about 0.06 of its potential returns per unit of risk. Phillips 66 Partners is currently generating about 0.0 per unit of risk. If you would invest  1,035  in Pembina Pipeline on October 11, 2024 and sell it today you would earn a total of  548.00  from holding Pembina Pipeline or generate 52.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	56.57%
Values	Daily Returns

Pembina Pipeline  vs.  Phillips 66 Partners

Pembina Pipeline

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pembina Pipeline 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.

Phillips 66 Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phillips 66 Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for Phillips 66 Partners investors.

Pair Trading with Pembina Pipeline and 718549AB4

The main advantage of trading using opposite Pembina Pipeline and 718549AB4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline position performs unexpectedly, 718549AB4 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 718549AB4 will offset losses from the drop in 718549AB4's long position.

The idea behind Pembina Pipeline and Phillips 66 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.