Correlation Between IGM Financial and TC Energy
Can any of the company-specific risk be diversified away by investing in both IGM Financial 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 IGM Financial and TC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGM Financial and TC Energy Corp, you can compare the effects of market volatilities on IGM Financial 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 IGM Financial with a short position of TC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGM Financial and TC Energy.
Diversification Opportunities for IGM Financial and TC Energy
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IGM and TRP-PC is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding IGM Financial 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 IGM Financial 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 IGM Financial 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 IGM Financial i.e., IGM Financial and TC Energy go up and down completely randomly.
Pair Corralation between IGM Financial and TC Energy
Assuming the 90 days trading horizon IGM Financial is expected to generate 1.59 times less return on investment than TC Energy. But when comparing it to its historical volatility, IGM Financial is 1.05 times less risky than TC Energy. It trades about 0.04 of its potential returns per unit of risk. TC Energy Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,131 in TC Energy Corp on October 12, 2024 and sell it today you would earn a total of 420.00 from holding TC Energy Corp or generate 37.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IGM Financial vs. TC Energy Corp
Performance |
| Timeline |
| IGM Financial |
| TC Energy Corp |
IGM Financial and TC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGM Financial and TC Energy
The main advantage of trading using opposite IGM Financial and TC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGM Financial 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.| IGM Financial vs. CI Financial Corp | IGM Financial vs. Great West Lifeco | IGM Financial vs. iA Financial | IGM Financial vs. Power |
| TC Energy vs. Birchtech Corp | TC Energy vs. Laurentian Bank | TC Energy vs. IGM Financial | TC Energy vs. Canadian Imperial Bank |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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