Correlation Between TC Energy and Cool
Can any of the company-specific risk be diversified away by investing in both TC Energy and Cool 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 Cool 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 Cool Company, you can compare the effects of market volatilities on TC Energy and Cool 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 Cool. Check out your portfolio center. Please also check ongoing floating volatility patterns of TC Energy and Cool.
Diversification Opportunities for TC Energy and Cool
Very good diversification
The 3 months correlation between TRP and Cool is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding TC Energy Corp and Cool Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cool Company 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 Cool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cool Company has no effect on the direction of TC Energy i.e., TC Energy and Cool go up and down completely randomly.
Pair Corralation between TC Energy and Cool
Considering the 90-day investment horizon TC Energy Corp is expected to generate 0.44 times more return on investment than Cool. However, TC Energy Corp is 2.26 times less risky than Cool. It trades about 0.26 of its potential returns per unit of risk. Cool Company is currently generating about -0.11 per unit of risk. If you would invest 3,370 in TC Energy Corp on August 31, 2024 and sell it today you would earn a total of 1,471 from holding TC Energy Corp or generate 43.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TC Energy Corp vs. Cool Company
Performance |
| Timeline |
| TC Energy Corp |
| Cool Company |
TC Energy and Cool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TC Energy and Cool
The main advantage of trading using opposite TC Energy and Cool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TC Energy position performs unexpectedly, Cool 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 Cool will offset losses from the drop in Cool's long position.| TC Energy vs. Enterprise Products Partners | TC Energy vs. Kinder Morgan | TC Energy vs. Energy Transfer LP | TC Energy vs. ONEOK Inc |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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