Correlation Between TC Energy and Next Hydrogen
Can any of the company-specific risk be diversified away by investing in both TC Energy and Next Hydrogen 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 Next Hydrogen 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 Next Hydrogen Solutions, you can compare the effects of market volatilities on TC Energy and Next Hydrogen 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 Next Hydrogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of TC Energy and Next Hydrogen.
Diversification Opportunities for TC Energy and Next Hydrogen
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between TRP and Next is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding TC Energy Corp and Next Hydrogen Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Hydrogen Solutions 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 Next Hydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Hydrogen Solutions has no effect on the direction of TC Energy i.e., TC Energy and Next Hydrogen go up and down completely randomly.
Pair Corralation between TC Energy and Next Hydrogen
Assuming the 90 days trading horizon TC Energy Corp is expected to generate 0.24 times more return on investment than Next Hydrogen. However, TC Energy Corp is 4.23 times less risky than Next Hydrogen. It trades about 0.07 of its potential returns per unit of risk. Next Hydrogen Solutions is currently generating about -0.01 per unit of risk. If you would invest 4,545 in TC Energy Corp on September 2, 2024 and sell it today you would earn a total of 2,281 from holding TC Energy Corp or generate 50.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
TC Energy Corp vs. Next Hydrogen Solutions
Performance |
| Timeline |
| TC Energy Corp |
| Next Hydrogen Solutions |
TC Energy and Next Hydrogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TC Energy and Next Hydrogen
The main advantage of trading using opposite TC Energy and Next Hydrogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TC Energy position performs unexpectedly, Next Hydrogen 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 Next Hydrogen will offset losses from the drop in Next Hydrogen's long position.| TC Energy vs. Enbridge | TC Energy vs. BCE Inc | TC Energy vs. Fortis Inc | TC Energy vs. Pembina Pipeline Corp |
| Next Hydrogen vs. Telus Corp | Next Hydrogen vs. Toronto Dominion Bank | Next Hydrogen vs. TC Energy Corp | Next Hydrogen vs. Manulife Financial 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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