Correlation Between TC Energy and TeraGo

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

Diversification Opportunities for TC Energy and TeraGo

-0.8

Correlation Coefficient

TC Energy  TeraGo

Pay attention - limited upside

The 3 months correlation between TRP and TeraGo is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding TC Energy Corp and TeraGo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TeraGo Inc 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 TeraGo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TeraGo Inc has no effect on the direction of TC Energy i.e., TC Energy and TeraGo go up and down completely randomly.

Pair Corralation between TC Energy and TeraGo

Assuming the 90 days trading horizon TC Energy Corp is expected to generate 0.38 times more return on investment than TeraGo. However, TC Energy Corp is 2.61 times less risky than TeraGo. It trades about 0.22 of its potential returns per unit of risk. TeraGo Inc is currently generating about -0.28 per unit of risk. If you would invest  5,678  in TC Energy Corp on September 13, 2024 and sell it today you would earn a total of  1,020  from holding TC Energy Corp or generate 17.96% return on investment over 90 days.

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

TC Energy Corp  vs.  TeraGo Inc

TC Energy Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TC Energy Corp are ranked lower than 17 (%) 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.

TeraGo Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TeraGo Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with TC Energy and TeraGo

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

The idea behind TC Energy Corp and TeraGo Inc 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.