Correlation Between TC Energy and BRP
Can any of the company-specific risk be diversified away by investing in both TC Energy and BRP 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 BRP 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 BRP Inc, you can compare the effects of market volatilities on TC Energy and BRP 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 BRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of TC Energy and BRP.
Diversification Opportunities for TC Energy and BRP
Pay attention - limited upside
The 3 months correlation between TRP and BRP is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding TC Energy Corp and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc 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 BRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRP Inc has no effect on the direction of TC Energy i.e., TC Energy and BRP go up and down completely randomly.
Pair Corralation between TC Energy and BRP
Assuming the 90 days trading horizon TC Energy Corp is expected to under-perform the BRP. But the stock apears to be less risky and, when comparing its historical volatility, TC Energy Corp is 2.89 times less risky than BRP. The stock trades about -0.03 of its potential returns per unit of risk. The BRP Inc is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 6,714 in BRP Inc on September 13, 2024 and sell it today you would earn a total of 758.00 from holding BRP Inc or generate 11.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TC Energy Corp vs. BRP Inc
Performance |
| Timeline |
| TC Energy Corp |
| BRP Inc |
TC Energy and BRP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TC Energy and BRP
The main advantage of trading using opposite TC Energy and BRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TC Energy position performs unexpectedly, BRP 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 BRP will offset losses from the drop in BRP's long position.| 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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