Correlation Between Pembina Pipeline and TC Energy
Can any of the company-specific risk be diversified away by investing in both Pembina Pipeline 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 Pembina Pipeline and TC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pembina Pipeline Corp and TC Energy Corp, you can compare the effects of market volatilities on Pembina Pipeline 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 Pembina Pipeline with a short position of TC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembina Pipeline and TC Energy.
Diversification Opportunities for Pembina Pipeline and TC Energy
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pembina and TRP is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp 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 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 Corp 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 Pembina Pipeline i.e., Pembina Pipeline and TC Energy go up and down completely randomly.
Pair Corralation between Pembina Pipeline and TC Energy
Assuming the 90 days trading horizon Pembina Pipeline is expected to generate 3.28 times less return on investment than TC Energy. But when comparing it to its historical volatility, Pembina Pipeline Corp is 1.3 times less risky than TC Energy. It trades about 0.11 of its potential returns per unit of risk. TC Energy Corp is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 6,495 in TC Energy Corp on August 24, 2024 and sell it today you would earn a total of 519.00 from holding TC Energy Corp or generate 7.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pembina Pipeline Corp vs. TC Energy Corp
Performance |
| Timeline |
| Pembina Pipeline Corp |
| TC Energy Corp |
Pembina Pipeline and TC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pembina Pipeline and TC Energy
The main advantage of trading using opposite Pembina Pipeline and TC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline 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.| Pembina Pipeline vs. Maple Peak Investments | Pembina Pipeline vs. Chemtrade Logistics Income | Pembina Pipeline vs. Algonquin Power Utilities | Pembina Pipeline vs. Brookfield Asset Management |
| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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