Correlation Between Dynagas LNG and TC Energy

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

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

Diversification Opportunities for Dynagas LNG and TC Energy

0.04

Correlation Coefficient

Dynagas LNG  TC Energy

Significant diversification

The 3 months correlation between Dynagas and TRP is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Dynagas LNG Partners 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 Dynagas LNG 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 Dynagas LNG Partners 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 Dynagas LNG i.e., Dynagas LNG and TC Energy go up and down completely randomly.

Pair Corralation between Dynagas LNG and TC Energy

Given the investment horizon of 90 days Dynagas LNG Partners is expected to under-perform the TC Energy. In addition to that, Dynagas LNG is 1.68 times more volatile than TC Energy Corp. It trades about -0.24 of its total potential returns per unit of risk. TC Energy Corp is currently generating about 0.06 per unit of volatility. If you would invest  4,612  in TC Energy Corp on December 28, 2024 and sell it today you would earn a total of  215.00  from holding TC Energy Corp or generate 4.66% return on investment over 90 days.

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

Dynagas LNG Partners  vs.  TC Energy Corp

Dynagas LNG Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dynagas LNG Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

TC Energy Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TC Energy Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, TC Energy is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Dynagas LNG and TC Energy

The main advantage of trading using opposite Dynagas LNG and TC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynagas LNG 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 Dynagas LNG Partners 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.