Correlation Between Pembina Pipeline and Drilling Tools

Can any of the company-specific risk be diversified away by investing in both Pembina Pipeline and Drilling Tools 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 Drilling Tools into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pembina Pipeline and Drilling Tools International, you can compare the effects of market volatilities on Pembina Pipeline and Drilling Tools 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 Drilling Tools. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembina Pipeline and Drilling Tools.

Diversification Opportunities for Pembina Pipeline and Drilling Tools

0.22

Correlation Coefficient

Pembina Pipeline  Drilling Tools

Modest diversification

The 3 months correlation between Pembina and Drilling is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline and Drilling Tools International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Drilling Tools Inter 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 are associated (or correlated) with Drilling Tools. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Drilling Tools Inter has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and Drilling Tools go up and down completely randomly.

Pair Corralation between Pembina Pipeline and Drilling Tools

Assuming the 90 days horizon Pembina Pipeline is expected to generate 0.19 times more return on investment than Drilling Tools. However, Pembina Pipeline is 5.15 times less risky than Drilling Tools. It trades about 0.23 of its potential returns per unit of risk. Drilling Tools International is currently generating about 0.0 per unit of risk. If you would invest  1,569  in Pembina Pipeline on May 7, 2025 and sell it today you would earn a total of  192.00  from holding Pembina Pipeline or generate 12.24% return on investment over 90 days.

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

Pembina Pipeline  vs.  Drilling Tools International

Pembina Pipeline

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pembina Pipeline are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Pembina Pipeline may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Drilling Tools Inter

Risk-Adjusted Performance

Very Weak

Over the last 90 days Drilling Tools International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Drilling Tools is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Pembina Pipeline and Drilling Tools

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

The idea behind Pembina Pipeline and Drilling Tools International 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.