Correlation Between Pembina Pipeline and Diamond Estates

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

Diversification Opportunities for Pembina Pipeline and Diamond Estates

-0.38

Correlation Coefficient

Pembina Pipeline  Diamond Estates

Very good diversification

The 3 months correlation between Pembina and Diamond is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and Diamond Estates Wines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Estates Wines 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 Diamond Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Estates Wines has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and Diamond Estates go up and down completely randomly.

Pair Corralation between Pembina Pipeline and Diamond Estates

Assuming the 90 days trading horizon Pembina Pipeline Corp is expected to generate 0.38 times more return on investment than Diamond Estates. However, Pembina Pipeline Corp is 2.6 times less risky than Diamond Estates. It trades about 0.13 of its potential returns per unit of risk. Diamond Estates Wines is currently generating about -0.06 per unit of risk. If you would invest  5,191  in Pembina Pipeline Corp on December 21, 2024 and sell it today you would earn a total of  533.00  from holding Pembina Pipeline Corp or generate 10.27% 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.  Diamond Estates Wines

Pembina Pipeline Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pembina Pipeline Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal essential indicators, Pembina Pipeline may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Diamond Estates Wines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Diamond Estates Wines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Pembina Pipeline and Diamond Estates

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

The idea behind Pembina Pipeline Corp and Diamond Estates Wines 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.