Correlation Between G8 EDUCATION and Targa Resources

Can any of the company-specific risk be diversified away by investing in both G8 EDUCATION and Targa Resources 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 G8 EDUCATION and Targa Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between G8 EDUCATION and Targa Resources Corp, you can compare the effects of market volatilities on G8 EDUCATION and Targa Resources 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 G8 EDUCATION with a short position of Targa Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of G8 EDUCATION and Targa Resources.

Diversification Opportunities for G8 EDUCATION and Targa Resources

-0.09

Correlation Coefficient

G8 EDUCATION  Targa Resources

Good diversification

The 3 months correlation between 3EAG and Targa is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding G8 EDUCATION and Targa Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Targa Resources Corp and G8 EDUCATION 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 G8 EDUCATION are associated (or correlated) with Targa Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Targa Resources Corp has no effect on the direction of G8 EDUCATION i.e., G8 EDUCATION and Targa Resources go up and down completely randomly.

Pair Corralation between G8 EDUCATION and Targa Resources

Assuming the 90 days trading horizon G8 EDUCATION is expected to generate 2.89 times less return on investment than Targa Resources. In addition to that, G8 EDUCATION is 1.35 times more volatile than Targa Resources Corp. It trades about 0.05 of its total potential returns per unit of risk. Targa Resources Corp is currently generating about 0.19 per unit of volatility. If you would invest  6,689  in Targa Resources Corp on October 22, 2024 and sell it today you would earn a total of  14,311  from holding Targa Resources Corp or generate 213.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

G8 EDUCATION  vs.  Targa Resources Corp

G8 EDUCATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days G8 EDUCATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, G8 EDUCATION is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Targa Resources Corp

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Targa Resources Corp are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Targa Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with G8 EDUCATION and Targa Resources

The main advantage of trading using opposite G8 EDUCATION and Targa Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G8 EDUCATION position performs unexpectedly, Targa Resources 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 Targa Resources will offset losses from the drop in Targa Resources' long position.

The idea behind G8 EDUCATION and Targa Resources Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.