Correlation Between Pembina Pipeline and Dorel Industries

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

Diversification Opportunities for Pembina Pipeline and Dorel Industries

-0.41

Correlation Coefficient

Pembina Pipeline  Dorel Industries

Very good diversification

The 3 months correlation between Pembina and Dorel is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and Dorel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dorel Industries 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 Dorel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dorel Industries has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and Dorel Industries go up and down completely randomly.

Pair Corralation between Pembina Pipeline and Dorel Industries

Assuming the 90 days trading horizon Pembina Pipeline Corp is expected to generate 0.28 times more return on investment than Dorel Industries. However, Pembina Pipeline Corp is 3.56 times less risky than Dorel Industries. It trades about 0.04 of its potential returns per unit of risk. Dorel Industries is currently generating about -0.35 per unit of risk. If you would invest  2,220  in Pembina Pipeline Corp on September 24, 2024 and sell it today you would earn a total of  30.00  from holding Pembina Pipeline Corp or generate 1.35% return on investment over 90 days.

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

Pembina Pipeline Corp  vs.  Dorel Industries

Pembina Pipeline Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pembina Pipeline Corp are ranked lower than 2 (%) 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 latest stock price disturbance, may contribute to short-term losses for the investors.

Dorel Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dorel Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Pembina Pipeline and Dorel Industries

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

The idea behind Pembina Pipeline Corp and Dorel Industries 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.