Correlation Between Topaz Energy and TC Energy
Can any of the company-specific risk be diversified away by investing in both Topaz Energy 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 Topaz Energy and TC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Topaz Energy Corp and TC Energy Corp, you can compare the effects of market volatilities on Topaz Energy 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 Topaz Energy with a short position of TC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Topaz Energy and TC Energy.
Diversification Opportunities for Topaz Energy and TC Energy
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Topaz and TRP is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Topaz Energy 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 Topaz Energy 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 Topaz Energy 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 Topaz Energy i.e., Topaz Energy and TC Energy go up and down completely randomly.
Pair Corralation between Topaz Energy and TC Energy
Assuming the 90 days horizon Topaz Energy Corp is expected to generate 1.37 times more return on investment than TC Energy. However, Topaz Energy is 1.37 times more volatile than TC Energy Corp. It trades about -0.07 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 1,996 in Topaz Energy Corp on September 12, 2024 and sell it today you would lose (53.00) from holding Topaz Energy Corp or give up 2.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Topaz Energy Corp vs. TC Energy Corp
Performance |
| Timeline |
| Topaz Energy Corp |
| TC Energy Corp |
Topaz Energy and TC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Topaz Energy and TC Energy
The main advantage of trading using opposite Topaz Energy and TC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Topaz Energy 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.| Topaz Energy vs. Williams Companies | Topaz Energy vs. Enterprise Products Partners | Topaz Energy vs. ONEOK Inc | Topaz Energy vs. Energy Transfer LP |
| TC Energy vs. Antero Midstream Partners | TC Energy vs. Excelerate Energy | TC Energy vs. Energy Transfer LP | TC Energy vs. Teekay |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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