Correlation Between Armada Hflr and TC Energy

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

By analyzing existing cross correlation between Armada Hflr Pr and TC Energy Corp, you can compare the effects of market volatilities on Armada Hflr and TC Energy 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 Armada Hflr with a short position of TC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and TC Energy.

Diversification Opportunities for Armada Hflr and TC Energy

-0.51

Correlation Coefficient

Armada Hflr  TC Energy

Excellent diversification

The 3 months correlation between Armada and TRP-PC is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and TC Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TC Energy Corp and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with TC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TC Energy Corp has no effect on the direction of Armada Hflr i.e., Armada Hflr and TC Energy go up and down completely randomly.

Pair Corralation between Armada Hflr and TC Energy

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the TC Energy. In addition to that, Armada Hflr is 2.41 times more volatile than TC Energy Corp. It trades about -0.26 of its total potential returns per unit of risk. TC Energy Corp is currently generating about 0.17 per unit of volatility. If you would invest  1,432  in TC Energy Corp on September 29, 2024 and sell it today you would earn a total of  27.00  from holding TC Energy Corp or generate 1.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Armada Hflr Pr  vs.  TC Energy Corp

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Armada Hflr is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

TC Energy Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TC Energy Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, TC Energy is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Armada Hflr and TC Energy

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

The idea behind Armada Hflr Pr and TC Energy 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.