Correlation Between Tucows and MEG Energy

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

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

Diversification Opportunities for Tucows and MEG Energy

-0.38

Correlation Coefficient

Tucows  MEG Energy

Very good diversification

The 3 months correlation between Tucows and MEG is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Tucows Inc and MEG Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEG Energy Corp and Tucows 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 Tucows Inc are associated (or correlated) with MEG Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEG Energy Corp has no effect on the direction of Tucows i.e., Tucows and MEG Energy go up and down completely randomly.

Pair Corralation between Tucows and MEG Energy

Assuming the 90 days horizon Tucows Inc is expected to under-perform the MEG Energy. In addition to that, Tucows is 1.41 times more volatile than MEG Energy Corp. It trades about -0.04 of its total potential returns per unit of risk. MEG Energy Corp is currently generating about 0.01 per unit of volatility. If you would invest  2,540  in MEG Energy Corp on September 3, 2024 and sell it today you would lose (20.00) from holding MEG Energy Corp or give up 0.79% of portfolio value over 90 days.

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

Tucows Inc  vs.  MEG Energy Corp

Tucows Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tucows Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

MEG Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Tucows and MEG Energy

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

The idea behind Tucows Inc and MEG 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.