Correlation Between TC Energy and Linamar
Can any of the company-specific risk be diversified away by investing in both TC Energy and Linamar 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 Linamar 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 Linamar, you can compare the effects of market volatilities on TC Energy and Linamar 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 Linamar. Check out your portfolio center. Please also check ongoing floating volatility patterns of TC Energy and Linamar.
Diversification Opportunities for TC Energy and Linamar
Very good diversification
The 3 months correlation between TRP and Linamar is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding TC Energy Corp and Linamar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linamar 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 Linamar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linamar has no effect on the direction of TC Energy i.e., TC Energy and Linamar go up and down completely randomly.
Pair Corralation between TC Energy and Linamar
Assuming the 90 days trading horizon TC Energy Corp is expected to generate 0.85 times more return on investment than Linamar. However, TC Energy Corp is 1.18 times less risky than Linamar. It trades about 0.09 of its potential returns per unit of risk. Linamar is currently generating about 0.01 per unit of risk. If you would invest 4,458 in TC Energy Corp on August 27, 2024 and sell it today you would earn a total of 2,507 from holding TC Energy Corp or generate 56.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TC Energy Corp vs. Linamar
Performance |
| Timeline |
| TC Energy Corp |
| Linamar |
TC Energy and Linamar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TC Energy and Linamar
The main advantage of trading using opposite TC Energy and Linamar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TC Energy position performs unexpectedly, Linamar 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 Linamar will offset losses from the drop in Linamar's long position.| TC Energy vs. Enbridge | TC Energy vs. BCE Inc | TC Energy vs. Fortis Inc | TC Energy vs. Pembina Pipeline Corp |
| Linamar vs. Martinrea International | Linamar vs. Magna International | Linamar vs. CCL Industries | Linamar vs. Stella Jones |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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