Correlation Between PLAY2CHILL and Targa Resources

Can any of the company-specific risk be diversified away by investing in both PLAY2CHILL 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 PLAY2CHILL and Targa Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PLAY2CHILL SA ZY and Targa Resources Corp, you can compare the effects of market volatilities on PLAY2CHILL 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 PLAY2CHILL with a short position of Targa Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAY2CHILL and Targa Resources.

Diversification Opportunities for PLAY2CHILL and Targa Resources

0.24

Correlation Coefficient

PLAY2CHILL  Targa Resources

Modest diversification

The 3 months correlation between PLAY2CHILL and Targa is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding PLAY2CHILL SA ZY 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 PLAY2CHILL 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 PLAY2CHILL SA ZY 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 PLAY2CHILL i.e., PLAY2CHILL and Targa Resources go up and down completely randomly.

Pair Corralation between PLAY2CHILL and Targa Resources

Assuming the 90 days horizon PLAY2CHILL is expected to generate 4.22 times less return on investment than Targa Resources. But when comparing it to its historical volatility, PLAY2CHILL SA ZY is 1.25 times less risky than Targa Resources. It trades about 0.22 of its potential returns per unit of risk. Targa Resources Corp is currently generating about 0.73 of returns per unit of risk over similar time horizon. If you would invest  17,080  in Targa Resources Corp on October 22, 2024 and sell it today you would earn a total of  3,920  from holding Targa Resources Corp or generate 22.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

PLAY2CHILL SA ZY  vs.  Targa Resources Corp

PLAY2CHILL SA ZY

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PLAY2CHILL SA ZY are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PLAY2CHILL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 PLAY2CHILL and Targa Resources

The main advantage of trading using opposite PLAY2CHILL and Targa Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLAY2CHILL 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 PLAY2CHILL SA ZY 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 Commodity Directory module to find actively traded commodities issued by global exchanges.