Correlation Between Pembina Pipeline and Quipt Home

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

Diversification Opportunities for Pembina Pipeline and Quipt Home

0.23

Correlation Coefficient

Pembina Pipeline  Quipt Home

Modest diversification

The 3 months correlation between Pembina and Quipt is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and Quipt Home Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quipt Home Medical 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 Quipt Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quipt Home Medical has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and Quipt Home go up and down completely randomly.

Pair Corralation between Pembina Pipeline and Quipt Home

Assuming the 90 days trading horizon Pembina Pipeline Corp is expected to generate 0.31 times more return on investment than Quipt Home. However, Pembina Pipeline Corp is 3.18 times less risky than Quipt Home. It trades about 0.03 of its potential returns per unit of risk. Quipt Home Medical is currently generating about -0.02 per unit of risk. If you would invest  2,138  in Pembina Pipeline Corp on October 4, 2024 and sell it today you would earn a total of  262.00  from holding Pembina Pipeline Corp or generate 12.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Pembina Pipeline Corp  vs.  Quipt Home Medical

Pembina Pipeline Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pembina Pipeline Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

Quipt Home Medical

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Quipt Home Medical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Quipt Home displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pembina Pipeline and Quipt Home

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

The idea behind Pembina Pipeline Corp and Quipt Home Medical 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.