Correlation Between TC Energy and Gladstone Investment

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

Diversification Opportunities for TC Energy and Gladstone Investment

0.75

Correlation Coefficient

TC Energy  Gladstone Investment

Poor diversification

The 3 months correlation between TRP and Gladstone is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding TC Energy Corp and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment 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 Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of TC Energy i.e., TC Energy and Gladstone Investment go up and down completely randomly.

Pair Corralation between TC Energy and Gladstone Investment

Considering the 90-day investment horizon TC Energy Corp is expected to generate 0.99 times more return on investment than Gladstone Investment. However, TC Energy Corp is 1.01 times less risky than Gladstone Investment. It trades about 0.2 of its potential returns per unit of risk. Gladstone Investment is currently generating about 0.17 per unit of risk. If you would invest  4,171  in TC Energy Corp on September 4, 2024 and sell it today you would earn a total of  687.00  from holding TC Energy Corp or generate 16.47% return on investment over 90 days.

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

TC Energy Corp  vs.  Gladstone Investment

TC Energy Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TC Energy Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, TC Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Gladstone Investment

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward indicators, Gladstone Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TC Energy and Gladstone Investment

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

The idea behind TC Energy Corp and Gladstone Investment 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.