Correlation Between Chicago Atlantic and Pembina Pipeline

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Can any of the company-specific risk be diversified away by investing in both Chicago Atlantic and Pembina Pipeline 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 Chicago Atlantic and Pembina Pipeline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chicago Atlantic Real and Pembina Pipeline, you can compare the effects of market volatilities on Chicago Atlantic and Pembina Pipeline 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 Chicago Atlantic with a short position of Pembina Pipeline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chicago Atlantic and Pembina Pipeline.

Diversification Opportunities for Chicago Atlantic and Pembina Pipeline

-0.66
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Chicago and Pembina is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Chicago Atlantic Real and Pembina Pipeline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pembina Pipeline and Chicago Atlantic 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 Chicago Atlantic Real are associated (or correlated) with Pembina Pipeline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pembina Pipeline has no effect on the direction of Chicago Atlantic i.e., Chicago Atlantic and Pembina Pipeline go up and down completely randomly.

Pair Corralation between Chicago Atlantic and Pembina Pipeline

Given the investment horizon of 90 days Chicago Atlantic is expected to generate 1.37 times less return on investment than Pembina Pipeline. But when comparing it to its historical volatility, Chicago Atlantic Real is 1.61 times less risky than Pembina Pipeline. It trades about 0.06 of its potential returns per unit of risk. Pembina Pipeline is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,137  in Pembina Pipeline on October 24, 2024 and sell it today you would earn a total of  446.00  from holding Pembina Pipeline or generate 39.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Chicago Atlantic Real  vs.  Pembina Pipeline

 Performance 
       Timeline  
Chicago Atlantic Real 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Chicago Atlantic Real are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Chicago Atlantic is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.
Pembina Pipeline 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Pembina Pipeline has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Pembina Pipeline is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Chicago Atlantic and Pembina Pipeline Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chicago Atlantic and Pembina Pipeline

The main advantage of trading using opposite Chicago Atlantic and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chicago Atlantic position performs unexpectedly, Pembina Pipeline 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 Pembina Pipeline will offset losses from the drop in Pembina Pipeline's long position.
The idea behind Chicago Atlantic Real and Pembina Pipeline 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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