Correlation Between Homerun Resources and TC Energy

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

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

Diversification Opportunities for Homerun Resources and TC Energy

-0.54

Correlation Coefficient

Homerun Resources  TC Energy

Excellent diversification

The 3 months correlation between Homerun and TRP-PB is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Homerun Resources 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 Homerun Resources 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 Homerun Resources 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 Homerun Resources i.e., Homerun Resources and TC Energy go up and down completely randomly.

Pair Corralation between Homerun Resources and TC Energy

Assuming the 90 days horizon Homerun Resources is expected to under-perform the TC Energy. In addition to that, Homerun Resources is 6.19 times more volatile than TC Energy Corp. It trades about -0.02 of its total potential returns per unit of risk. TC Energy Corp is currently generating about 0.05 per unit of volatility. If you would invest  1,415  in TC Energy Corp on December 24, 2024 and sell it today you would earn a total of  31.00  from holding TC Energy Corp or generate 2.19% return on investment over 90 days.

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

Homerun Resources  vs.  TC Energy Corp

Homerun Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Homerun Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Homerun Resources is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

TC Energy Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TC Energy Corp are ranked lower than 3 (%) 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 Homerun Resources and TC Energy

The main advantage of trading using opposite Homerun Resources and TC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Homerun Resources 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 Homerun Resources 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.