Correlation Between Eastwood Bio and TC Energy

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

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

Diversification Opportunities for Eastwood Bio and TC Energy

-0.37

Correlation Coefficient

Eastwood Bio  TC Energy

Very good diversification

The 3 months correlation between Eastwood and TRP-PF is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Eastwood Bio Medical Canada 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 Eastwood Bio 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 Eastwood Bio Medical Canada 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 Eastwood Bio i.e., Eastwood Bio and TC Energy go up and down completely randomly.

Pair Corralation between Eastwood Bio and TC Energy

Assuming the 90 days horizon Eastwood Bio Medical Canada is expected to under-perform the TC Energy. In addition to that, Eastwood Bio is 11.31 times more volatile than TC Energy Corp. It trades about -0.06 of its total potential returns per unit of risk. TC Energy Corp is currently generating about -0.22 per unit of volatility. If you would invest  1,799  in TC Energy Corp on September 29, 2024 and sell it today you would lose (62.00) from holding TC Energy Corp or give up 3.45% of portfolio value over 90 days.

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

Eastwood Bio Medical Canada  vs.  TC Energy Corp

Eastwood Bio Medical

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eastwood Bio Medical Canada are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Eastwood Bio showed solid returns over the last few months and may actually be approaching a breakup point.

TC Energy Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TC Energy Corp are ranked lower than 6 (%) 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 latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eastwood Bio and TC Energy

The main advantage of trading using opposite Eastwood Bio and TC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastwood Bio 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 Eastwood Bio Medical Canada 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.