Correlation Between Maple Leaf and TC Energy

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

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

Diversification Opportunities for Maple Leaf and TC Energy

-0.38

Correlation Coefficient

Maple Leaf  TC Energy

Very good diversification

The 3 months correlation between Maple and TRP-PC is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods 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 Maple Leaf 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 Maple Leaf Foods 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 Maple Leaf i.e., Maple Leaf and TC Energy go up and down completely randomly.

Pair Corralation between Maple Leaf and TC Energy

Assuming the 90 days trading horizon Maple Leaf Foods is expected to under-perform the TC Energy. In addition to that, Maple Leaf is 1.61 times more volatile than TC Energy Corp. It trades about -0.03 of its total potential returns per unit of risk. TC Energy Corp is currently generating about 0.13 per unit of volatility. If you would invest  986.00  in TC Energy Corp on October 5, 2024 and sell it today you would earn a total of  497.00  from holding TC Energy Corp or generate 50.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.68%
Values	Daily Returns

Maple Leaf Foods  vs.  TC Energy Corp

Maple Leaf Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maple Leaf Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Maple Leaf is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

TC Energy Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TC Energy Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, TC Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Maple Leaf and TC Energy

The main advantage of trading using opposite Maple Leaf and TC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf 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 Maple Leaf Foods 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.