Correlation Between Pembina Pipeline and Data Communications

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

Diversification Opportunities for Pembina Pipeline and Data Communications

-0.16

Correlation Coefficient

Pembina Pipeline  Data Communications

Good diversification

The 3 months correlation between Pembina and Data is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and Data Communications Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Communications 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 Data Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Communications has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and Data Communications go up and down completely randomly.

Pair Corralation between Pembina Pipeline and Data Communications

Assuming the 90 days trading horizon Pembina Pipeline is expected to generate 5.85 times less return on investment than Data Communications. But when comparing it to its historical volatility, Pembina Pipeline Corp is 2.78 times less risky than Data Communications. It trades about 0.02 of its potential returns per unit of risk. Data Communications Management is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  196.00  in Data Communications Management on December 1, 2024 and sell it today you would earn a total of  14.00  from holding Data Communications Management or generate 7.14% return on investment over 90 days.

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

Pembina Pipeline Corp  vs.  Data Communications Management

Pembina Pipeline Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pembina Pipeline Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Pembina Pipeline is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Data Communications

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Data Communications Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Data Communications may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Pembina Pipeline and Data Communications

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

The idea behind Pembina Pipeline Corp and Data Communications Management 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.

Check out your portfolio center.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.