Correlation Between Pembina Pipeline and Themac Resources

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

Diversification Opportunities for Pembina Pipeline and Themac Resources

-0.05

Correlation Coefficient

Pembina Pipeline  Themac Resources

Good diversification

The 3 months correlation between Pembina and Themac is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and Themac Resources Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themac Resources 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 Themac Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themac Resources has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and Themac Resources go up and down completely randomly.

Pair Corralation between Pembina Pipeline and Themac Resources

Assuming the 90 days trading horizon Pembina Pipeline is expected to generate 18.63 times less return on investment than Themac Resources. But when comparing it to its historical volatility, Pembina Pipeline Corp is 12.11 times less risky than Themac Resources. It trades about 0.04 of its potential returns per unit of risk. Themac Resources Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2.50  in Themac Resources Group on September 22, 2024 and sell it today you would earn a total of  1.00  from holding Themac Resources Group or generate 40.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

Pembina Pipeline Corp  vs.  Themac Resources Group

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

Themac Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Themac Resources Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Themac Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pembina Pipeline and Themac Resources

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

The idea behind Pembina Pipeline Corp and Themac Resources Group 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.