Correlation Between Athabasca Oil and TC Energy

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

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

Diversification Opportunities for Athabasca Oil and TC Energy

0.17

Correlation Coefficient

Athabasca Oil  TC Energy

Average diversification

The 3 months correlation between Athabasca and TRP is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Athabasca Oil Corp and TC Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TC Energy Corp and Athabasca Oil 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 Athabasca Oil Corp are associated (or correlated) with TC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TC Energy Corp has no effect on the direction of Athabasca Oil i.e., Athabasca Oil and TC Energy go up and down completely randomly.

Pair Corralation between Athabasca Oil and TC Energy

Assuming the 90 days trading horizon Athabasca Oil is expected to generate 23.37 times less return on investment than TC Energy. In addition to that, Athabasca Oil is 1.63 times more volatile than TC Energy Corp. It trades about 0.01 of its total potential returns per unit of risk. TC Energy Corp is currently generating about 0.26 per unit of volatility. If you would invest  5,614  in TC Energy Corp on September 3, 2024 and sell it today you would earn a total of  1,212  from holding TC Energy Corp or generate 21.59% return on investment over 90 days.

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

Athabasca Oil Corp  vs.  TC Energy Corp

Athabasca Oil Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Athabasca Oil Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Athabasca Oil is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

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.

Pair Trading with Athabasca Oil and TC Energy

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

The idea behind Athabasca Oil Corp and TC Energy Corp 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.