Correlation Between Parkland Fuel and TC Energy
Can any of the company-specific risk be diversified away by investing in both Parkland Fuel 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 Parkland Fuel and TC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parkland Fuel and TC Energy Corp, you can compare the effects of market volatilities on Parkland Fuel 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 Parkland Fuel with a short position of TC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parkland Fuel and TC Energy.
Diversification Opportunities for Parkland Fuel and TC Energy
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Parkland and TRP is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Parkland Fuel 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 Parkland Fuel 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 Parkland Fuel 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 Parkland Fuel i.e., Parkland Fuel and TC Energy go up and down completely randomly.
Pair Corralation between Parkland Fuel and TC Energy
Assuming the 90 days trading horizon Parkland Fuel is expected to generate 1.57 times more return on investment than TC Energy. However, Parkland Fuel is 1.57 times more volatile than TC Energy Corp. It trades about 0.25 of its potential returns per unit of risk. TC Energy Corp is currently generating about 0.19 per unit of risk. If you would invest 3,240 in Parkland Fuel on September 1, 2024 and sell it today you would earn a total of 375.00 from holding Parkland Fuel or generate 11.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parkland Fuel vs. TC Energy Corp
Performance |
| Timeline |
| Parkland Fuel |
| TC Energy Corp |
Parkland Fuel and TC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parkland Fuel and TC Energy
The main advantage of trading using opposite Parkland Fuel and TC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parkland Fuel 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.| Parkland Fuel vs. Keyera Corp | Parkland Fuel vs. Gibson Energy | Parkland Fuel vs. TFI International | Parkland Fuel vs. Pembina Pipeline Corp |
| TC Energy vs. Enbridge | TC Energy vs. BCE Inc | TC Energy vs. Fortis Inc | TC Energy vs. Pembina Pipeline 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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