Correlation Between TC Energy and Westport Fuel
Can any of the company-specific risk be diversified away by investing in both TC Energy and Westport Fuel 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 Westport Fuel 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 Westport Fuel Systems, you can compare the effects of market volatilities on TC Energy and Westport Fuel 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 Westport Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of TC Energy and Westport Fuel.
Diversification Opportunities for TC Energy and Westport Fuel
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TRP and Westport is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding TC Energy Corp and Westport Fuel Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westport Fuel Systems 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 Westport Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westport Fuel Systems has no effect on the direction of TC Energy i.e., TC Energy and Westport Fuel go up and down completely randomly.
Pair Corralation between TC Energy and Westport Fuel
Assuming the 90 days trading horizon TC Energy Corp is expected to generate 0.37 times more return on investment than Westport Fuel. However, TC Energy Corp is 2.74 times less risky than Westport Fuel. It trades about 0.07 of its potential returns per unit of risk. Westport Fuel Systems is currently generating about -0.01 per unit of risk. If you would invest 4,517 in TC Energy Corp on September 4, 2024 and sell it today you would earn a total of 2,307 from holding TC Energy Corp or generate 51.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TC Energy Corp vs. Westport Fuel Systems
Performance |
| Timeline |
| TC Energy Corp |
| Westport Fuel Systems |
TC Energy and Westport Fuel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TC Energy and Westport Fuel
The main advantage of trading using opposite TC Energy and Westport Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TC Energy position performs unexpectedly, Westport Fuel 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 Westport Fuel will offset losses from the drop in Westport Fuel's long position.| TC Energy vs. Enbridge | TC Energy vs. BCE Inc | TC Energy vs. Fortis Inc | TC Energy vs. Pembina Pipeline Corp |
| Westport Fuel vs. Ballard Power Systems | Westport Fuel vs. NFI Group | Westport Fuel vs. GreenPower Motor | Westport Fuel vs. Real Matters |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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