Correlation Between Capital Power and Pembina Pipeline
Can any of the company-specific risk be diversified away by investing in both Capital Power 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 Capital Power and Pembina Pipeline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Power and Pembina Pipeline Corp, you can compare the effects of market volatilities on Capital Power 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 Capital Power with a short position of Pembina Pipeline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Power and Pembina Pipeline.
Diversification Opportunities for Capital Power and Pembina Pipeline
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Capital and Pembina is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Capital Power and Pembina Pipeline Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pembina Pipeline Corp and Capital Power 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 Capital Power 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 Corp has no effect on the direction of Capital Power i.e., Capital Power and Pembina Pipeline go up and down completely randomly.
Pair Corralation between Capital Power and Pembina Pipeline
Assuming the 90 days trading horizon Capital Power is expected to generate 1.08 times more return on investment than Pembina Pipeline. However, Capital Power is 1.08 times more volatile than Pembina Pipeline Corp. It trades about 0.29 of its potential returns per unit of risk. Pembina Pipeline Corp is currently generating about -0.05 per unit of risk. If you would invest 4,803 in Capital Power on April 23, 2025 and sell it today you would earn a total of 1,222 from holding Capital Power or generate 25.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Capital Power vs. Pembina Pipeline Corp
Performance |
Timeline |
Capital Power |
Pembina Pipeline Corp |
Capital Power and Pembina Pipeline Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Capital Power and Pembina Pipeline
The main advantage of trading using opposite Capital Power and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Power 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.Capital Power vs. Capital Power | Capital Power vs. Canadian Utilities Limited | Capital Power vs. Emera Inc | Capital Power vs. Keyera Corp |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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