Correlation Between TC Energy and United Insurance
Can any of the company-specific risk be diversified away by investing in both TC Energy and United Insurance 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 United Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TC Energy and United Insurance Holdings, you can compare the effects of market volatilities on TC Energy and United Insurance 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 United Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of TC Energy and United Insurance.
Diversification Opportunities for TC Energy and United Insurance
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TRS and United is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding TC Energy and United Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Insurance Holdings 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 are associated (or correlated) with United Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Insurance Holdings has no effect on the direction of TC Energy i.e., TC Energy and United Insurance go up and down completely randomly.
Pair Corralation between TC Energy and United Insurance
Assuming the 90 days horizon TC Energy is expected to under-perform the United Insurance. But the stock apears to be less risky and, when comparing its historical volatility, TC Energy is 2.01 times less risky than United Insurance. The stock trades about -0.07 of its potential returns per unit of risk. The United Insurance Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,250 in United Insurance Holdings on September 14, 2024 and sell it today you would earn a total of 60.00 from holding United Insurance Holdings or generate 4.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TC Energy vs. United Insurance Holdings
Performance |
| Timeline |
| TC Energy |
| United Insurance Holdings |
TC Energy and United Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TC Energy and United Insurance
The main advantage of trading using opposite TC Energy and United Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TC Energy position performs unexpectedly, United Insurance 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 United Insurance will offset losses from the drop in United Insurance's long position.| TC Energy vs. Harmony Gold Mining | TC Energy vs. INDO RAMA SYNTHETIC | TC Energy vs. MCEWEN MINING INC | TC Energy vs. NISSAN CHEMICAL IND |
| United Insurance vs. Insurance Australia Group | United Insurance vs. Superior Plus Corp | United Insurance vs. SIVERS SEMICONDUCTORS AB | United Insurance vs. CHINA HUARONG ENERHD 50 |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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