Correlation Between TC Energy and AltaGas

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

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

Diversification Opportunities for TC Energy and AltaGas

0.06

Correlation Coefficient

TC Energy  AltaGas

Significant diversification

The 3 months correlation between TRP and AltaGas is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding TC Energy Corp and AltaGas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AltaGas and TC Energy 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 TC Energy Corp are associated (or correlated) with AltaGas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AltaGas has no effect on the direction of TC Energy i.e., TC Energy and AltaGas go up and down completely randomly.

Pair Corralation between TC Energy and AltaGas

Assuming the 90 days trading horizon TC Energy Corp is expected to generate 0.99 times more return on investment than AltaGas. However, TC Energy Corp is 1.01 times less risky than AltaGas. It trades about 0.26 of its potential returns per unit of risk. AltaGas is currently generating about 0.03 per unit of risk. If you would invest  5,636  in TC Energy Corp on September 4, 2024 and sell it today you would earn a total of  1,212  from holding TC Energy Corp or generate 21.5% return on investment over 90 days.

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

TC Energy Corp  vs.  AltaGas

TC Energy Corp

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TC Energy Corp are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, TC Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

AltaGas

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AltaGas are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, AltaGas is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with TC Energy and AltaGas

The main advantage of trading using opposite TC Energy and AltaGas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TC Energy position performs unexpectedly, AltaGas 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 AltaGas will offset losses from the drop in AltaGas' long position.

The idea behind TC Energy Corp and AltaGas 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.