Correlation Between Astar and TC Energy
Can any of the company-specific risk be diversified away by investing in both Astar and TC Energy 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 Astar and TC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and TC Energy Corp, you can compare the effects of market volatilities on Astar and TC Energy 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 Astar with a short position of TC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and TC Energy.
Diversification Opportunities for Astar and TC Energy
Average diversification
The 3 months correlation between Astar and TRP-PC is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Astar and TC Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TC Energy Corp and Astar 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 Astar are associated (or correlated) with TC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TC Energy Corp has no effect on the direction of Astar i.e., Astar and TC Energy go up and down completely randomly.
Pair Corralation between Astar and TC Energy
Assuming the 90 days trading horizon Astar is expected to under-perform the TC Energy. In addition to that, Astar is 4.99 times more volatile than TC Energy Corp. It trades about -0.02 of its total potential returns per unit of risk. TC Energy Corp is currently generating about 0.12 per unit of volatility. If you would invest 1,227 in TC Energy Corp on October 12, 2024 and sell it today you would earn a total of 311.00 from holding TC Energy Corp or generate 25.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 89.78% |
| Values | Daily Returns |
Astar vs. TC Energy Corp
Performance |
| Timeline |
| Astar |
| TC Energy Corp |
Astar and TC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and TC Energy
The main advantage of trading using opposite Astar and TC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar position performs unexpectedly, TC Energy 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 TC Energy will offset losses from the drop in TC Energy's long position.The idea behind Astar and TC Energy Corp 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.| TC Energy vs. Manulife Financial Corp | TC Energy vs. Plaza Retail REIT | TC Energy vs. Canso Credit Trust | TC Energy vs. Profound Medical Corp |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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