Correlation Between TC Energy and Newtopia

Can any of the company-specific risk be diversified away by investing in both TC Energy and Newtopia 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 Newtopia 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 Newtopia, you can compare the effects of market volatilities on TC Energy and Newtopia 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 Newtopia. Check out your portfolio center. Please also check ongoing floating volatility patterns of TC Energy and Newtopia.

Diversification Opportunities for TC Energy and Newtopia

-0.59

Correlation Coefficient

TC Energy  Newtopia

Excellent diversification

The 3 months correlation between TRP and Newtopia is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding TC Energy Corp and Newtopia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newtopia 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 Newtopia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newtopia has no effect on the direction of TC Energy i.e., TC Energy and Newtopia go up and down completely randomly.

Pair Corralation between TC Energy and Newtopia

Assuming the 90 days trading horizon TC Energy Corp is expected to generate 0.11 times more return on investment than Newtopia. However, TC Energy Corp is 8.72 times less risky than Newtopia. It trades about 0.15 of its potential returns per unit of risk. Newtopia is currently generating about -0.04 per unit of risk. If you would invest  4,586  in TC Energy Corp on October 9, 2024 and sell it today you would earn a total of  2,201  from holding TC Energy Corp or generate 47.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.39%
Values	Daily Returns

TC Energy Corp  vs.  Newtopia

TC Energy Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TC Energy Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, TC Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Newtopia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newtopia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with TC Energy and Newtopia

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

The idea behind TC Energy Corp and Newtopia 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.