Correlation Between Genesis Energy and TC Energy

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

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

Diversification Opportunities for Genesis Energy and TC Energy

-0.66

Correlation Coefficient

Genesis Energy  TC Energy

Excellent diversification

The 3 months correlation between Genesis and TRP is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Genesis Energy LP 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 Genesis 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 Genesis Energy LP 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 Genesis Energy i.e., Genesis Energy and TC Energy go up and down completely randomly.

Pair Corralation between Genesis Energy and TC Energy

Considering the 90-day investment horizon Genesis Energy LP is expected to under-perform the TC Energy. In addition to that, Genesis Energy is 1.75 times more volatile than TC Energy Corp. It trades about -0.1 of its total potential returns per unit of risk. TC Energy Corp is currently generating about 0.2 per unit of volatility. If you would invest  4,152  in TC Energy Corp on August 30, 2024 and sell it today you would earn a total of  689.00  from holding TC Energy Corp or generate 16.59% return on investment over 90 days.

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

Genesis Energy LP  vs.  TC Energy Corp

Genesis Energy LP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genesis Energy LP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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 weak basic indicators, TC Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genesis Energy and TC Energy

The main advantage of trading using opposite Genesis Energy and TC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genesis Energy 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 Genesis Energy LP 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.