Correlation Between Pembina Pipeline and Fortis

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

Diversification Opportunities for Pembina Pipeline and Fortis

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between Pembina and Fortis is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and Fortis Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortis Inc 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 Fortis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortis Inc has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and Fortis go up and down completely randomly.

Pair Corralation between Pembina Pipeline and Fortis

Assuming the 90 days trading horizon Pembina Pipeline Corp is expected to generate 1.43 times more return on investment than Fortis. However, Pembina Pipeline is 1.43 times more volatile than Fortis Inc. It trades about 0.0 of its potential returns per unit of risk. Fortis Inc is currently generating about -0.03 per unit of risk. If you would invest  5,132  in Pembina Pipeline Corp on April 21, 2025 and sell it today you would lose (22.00) from holding Pembina Pipeline Corp or give up 0.43% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Pembina Pipeline Corp  vs.  Fortis Inc

 Performance 
       Timeline  
Pembina Pipeline Corp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Pembina Pipeline Corp has generated negative risk-adjusted returns adding no value to investors with long positions. 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.
Fortis Inc 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Fortis Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Fortis is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pembina Pipeline and Fortis Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pembina Pipeline and Fortis

The main advantage of trading using opposite Pembina Pipeline and Fortis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline position performs unexpectedly, Fortis 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 Fortis will offset losses from the drop in Fortis' long position.
The idea behind Pembina Pipeline Corp and Fortis Inc 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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