Correlation Between STAG Industrial and TC Energy

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

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

Diversification Opportunities for STAG Industrial and TC Energy

-0.19

Correlation Coefficient

STAG Industrial  TC Energy

Good diversification

The 3 months correlation between STAG and TRP is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding STAG Industrial 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 STAG Industrial 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 STAG Industrial 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 STAG Industrial i.e., STAG Industrial and TC Energy go up and down completely randomly.

Pair Corralation between STAG Industrial and TC Energy

Given the investment horizon of 90 days STAG Industrial is expected to generate 2.72 times less return on investment than TC Energy. In addition to that, STAG Industrial is 1.05 times more volatile than TC Energy Corp. It trades about 0.04 of its total potential returns per unit of risk. TC Energy Corp is currently generating about 0.11 per unit of volatility. If you would invest  4,551  in TC Energy Corp on December 26, 2024 and sell it today you would earn a total of  376.00  from holding TC Energy Corp or generate 8.26% return on investment over 90 days.

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

STAG Industrial  vs.  TC Energy Corp

STAG Industrial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in STAG Industrial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, STAG Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

TC Energy Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TC Energy Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, TC Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with STAG Industrial and TC Energy

The main advantage of trading using opposite STAG Industrial and TC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STAG Industrial 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 STAG Industrial 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..