Correlation Between Pembina Pipeline and Montero Mining

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

Diversification Opportunities for Pembina Pipeline and Montero Mining

0.42

Correlation Coefficient

Pembina Pipeline  Montero Mining

Very weak diversification

The 3 months correlation between Pembina and Montero is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and Montero Mining and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montero 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 Montero Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Montero Mining has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and Montero Mining go up and down completely randomly.

Pair Corralation between Pembina Pipeline and Montero Mining

Assuming the 90 days trading horizon Pembina Pipeline Corp is expected to generate 0.49 times more return on investment than Montero Mining. However, Pembina Pipeline Corp is 2.04 times less risky than Montero Mining. It trades about 0.12 of its potential returns per unit of risk. Montero Mining and is currently generating about 0.01 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  499.00  from holding Pembina Pipeline Corp or generate 9.61% return on investment over 90 days.

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

Pembina Pipeline Corp  vs.  Montero Mining and

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 9 (%) 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.

Montero Mining

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Montero Mining and are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Montero Mining is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Pembina Pipeline and Montero Mining

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

The idea behind Pembina Pipeline Corp and Montero Mining and 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.