Correlation Between TC Energy and Premium Income

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

Diversification Opportunities for TC Energy and Premium Income

0.0

Correlation Coefficient

TC Energy  Premium Income

Pay attention - limited upside

The 3 months correlation between TRP and Premium is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TC Energy Corp and Premium Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Income 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 Premium Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Income has no effect on the direction of TC Energy i.e., TC Energy and Premium Income go up and down completely randomly.

Pair Corralation between TC Energy and Premium Income

Assuming the 90 days trading horizon TC Energy Corp is expected to generate 0.57 times more return on investment than Premium Income. However, TC Energy Corp is 1.75 times less risky than Premium Income. It trades about 0.07 of its potential returns per unit of risk. Premium Income is currently generating about -0.03 per unit of risk. If you would invest  4,317  in TC Energy Corp on October 9, 2024 and sell it today you would earn a total of  2,470  from holding TC Energy Corp or generate 57.22% return on investment over 90 days.

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

TC Energy Corp  vs.  Premium Income

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.

Premium Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Premium Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with TC Energy and Premium Income

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

The idea behind TC Energy Corp and Premium Income 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.