Correlation Between Pembina Pipeline and Energy Transfer

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

Diversification Opportunities for Pembina Pipeline and Energy Transfer

-0.53

Correlation Coefficient

Pembina Pipeline  Energy Transfer

Excellent diversification

The 3 months correlation between Pembina and Energy is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and Energy Transfer LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Transfer LP 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 Energy Transfer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Transfer LP has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and Energy Transfer go up and down completely randomly.

Pair Corralation between Pembina Pipeline and Energy Transfer

Considering the 90-day investment horizon Pembina Pipeline Corp is expected to under-perform the Energy Transfer. In addition to that, Pembina Pipeline is 1.05 times more volatile than Energy Transfer LP. It trades about -0.05 of its total potential returns per unit of risk. Energy Transfer LP is currently generating about 0.1 per unit of volatility. If you would invest  1,657  in Energy Transfer LP on May 7, 2025 and sell it today you would earn a total of  122.00  from holding Energy Transfer LP or generate 7.36% return on investment over 90 days.

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

Pembina Pipeline Corp  vs.  Energy Transfer LP

Pembina Pipeline Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pembina Pipeline Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Pembina Pipeline is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Energy Transfer LP

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Transfer LP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Energy Transfer may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Pembina Pipeline and Energy Transfer

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

The idea behind Pembina Pipeline Corp and Energy Transfer LP 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.