Correlation Between GOLDMAN SACHS and TC Energy

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

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

Diversification Opportunities for GOLDMAN SACHS and TC Energy

0.78

Correlation Coefficient

GOLDMAN SACHS  TC Energy

Poor diversification

The 3 months correlation between GOLDMAN and TRP-PF is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding GOLDMAN SACHS CDR 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 GOLDMAN SACHS 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 GOLDMAN SACHS CDR 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 GOLDMAN SACHS i.e., GOLDMAN SACHS and TC Energy go up and down completely randomly.

Pair Corralation between GOLDMAN SACHS and TC Energy

Assuming the 90 days trading horizon GOLDMAN SACHS CDR is expected to under-perform the TC Energy. In addition to that, GOLDMAN SACHS is 2.02 times more volatile than TC Energy Corp. It trades about -0.12 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 Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

GOLDMAN SACHS CDR  vs.  TC Energy Corp

GOLDMAN SACHS CDR

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GOLDMAN SACHS CDR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, GOLDMAN SACHS displayed 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 GOLDMAN SACHS and TC Energy

The main advantage of trading using opposite GOLDMAN SACHS and TC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOLDMAN SACHS 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 GOLDMAN SACHS CDR 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.