Correlation Between Pembina Pipeline and Jaguar Mining

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

Diversification Opportunities for Pembina Pipeline and Jaguar Mining

-0.4

Correlation Coefficient

Pembina Pipeline  Jaguar Mining

Very good diversification

The 3 months correlation between Pembina and Jaguar is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and Jaguar Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaguar Mining 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 Jaguar Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaguar Mining has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and Jaguar Mining go up and down completely randomly.

Pair Corralation between Pembina Pipeline and Jaguar Mining

Assuming the 90 days trading horizon Pembina Pipeline Corp is expected to under-perform the Jaguar Mining. But the preferred stock apears to be less risky and, when comparing its historical volatility, Pembina Pipeline Corp is 6.95 times less risky than Jaguar Mining. The preferred stock trades about -0.02 of its potential returns per unit of risk. The Jaguar Mining is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  219.00  in Jaguar Mining on December 25, 2024 and sell it today you would earn a total of  71.00  from holding Jaguar Mining or generate 32.42% 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.  Jaguar Mining

Pembina Pipeline Corp

Risk-Adjusted Performance

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 somewhat strong essential indicators, Pembina Pipeline is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jaguar Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jaguar Mining are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Jaguar Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pembina Pipeline and Jaguar Mining

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

The idea behind Pembina Pipeline Corp and Jaguar Mining 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.