Correlation Between Enbridge Pref and TC Energy
Can any of the company-specific risk be diversified away by investing in both Enbridge Pref 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 Enbridge Pref and TC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enbridge Pref 7 and TC Energy Corp, you can compare the effects of market volatilities on Enbridge Pref 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 Enbridge Pref with a short position of TC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge Pref and TC Energy.
Diversification Opportunities for Enbridge Pref and TC Energy
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Enbridge and TRP-PC is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Pref 7 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 Enbridge Pref 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 Enbridge Pref 7 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 Enbridge Pref i.e., Enbridge Pref and TC Energy go up and down completely randomly.
Pair Corralation between Enbridge Pref and TC Energy
Assuming the 90 days trading horizon Enbridge Pref is expected to generate 1.05 times less return on investment than TC Energy. But when comparing it to its historical volatility, Enbridge Pref 7 is 1.95 times less risky than TC Energy. It trades about 0.13 of its potential returns per unit of risk. TC Energy Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,126 in TC Energy Corp on October 26, 2024 and sell it today you would earn a total of 497.00 from holding TC Energy Corp or generate 44.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enbridge Pref 7 vs. TC Energy Corp
Performance |
| Timeline |
| Enbridge Pref 7 |
| TC Energy Corp |
Enbridge Pref and TC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enbridge Pref and TC Energy
The main advantage of trading using opposite Enbridge Pref and TC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge Pref 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.| Enbridge Pref vs. Pembina Pipeline Corp | Enbridge Pref vs. Pembina Pipeline Corp | Enbridge Pref vs. Pembina Pipeline Corp | Enbridge Pref vs. Pembina Pipeline Corp |
| TC Energy vs. DRI Healthcare Trust | TC Energy vs. Dream Office Real | TC Energy vs. Andlauer Healthcare Gr | TC Energy vs. Nova Leap Health |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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