Correlation Between TC Energy and Western Investment
Can any of the company-specific risk be diversified away by investing in both TC Energy and Western Investment 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 TC Energy and Western Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TC Energy Corp and Western Investment, you can compare the effects of market volatilities on TC Energy and Western Investment 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 TC Energy with a short position of Western Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of TC Energy and Western Investment.
Diversification Opportunities for TC Energy and Western Investment
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TRP-PA and Western is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding TC Energy Corp and Western Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Investment and TC 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 TC Energy Corp are associated (or correlated) with Western Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Investment has no effect on the direction of TC Energy i.e., TC Energy and Western Investment go up and down completely randomly.
Pair Corralation between TC Energy and Western Investment
Assuming the 90 days trading horizon TC Energy is expected to generate 5.47 times less return on investment than Western Investment. But when comparing it to its historical volatility, TC Energy Corp is 4.05 times less risky than Western Investment. It trades about 0.13 of its potential returns per unit of risk. Western Investment is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 48.00 in Western Investment on October 28, 2024 and sell it today you would earn a total of 12.00 from holding Western Investment or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TC Energy Corp vs. Western Investment
Performance |
| Timeline |
| TC Energy Corp |
| Western Investment |
TC Energy and Western Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TC Energy and Western Investment
The main advantage of trading using opposite TC Energy and Western Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TC Energy position performs unexpectedly, Western Investment 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 Western Investment will offset losses from the drop in Western Investment's long position.| TC Energy vs. Enbridge | TC Energy vs. Enbridge Pref 3 | TC Energy vs. Enbridge Srs P | TC Energy vs. Enbridge Pref 7 |
| Western Investment vs. High Liner Foods | Western Investment vs. Stampede Drilling | Western Investment vs. Medical Facilities | Western Investment vs. Canso Select Opportunities |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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