Correlation Between Targa Resources and TC Energy

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

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

Diversification Opportunities for Targa Resources and TC Energy

-0.26

Correlation Coefficient

Targa Resources  TC Energy

Very good diversification

The 3 months correlation between Targa and TRS is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Targa Resources Corp and TC Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TC Energy and Targa Resources 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 Targa Resources 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 has no effect on the direction of Targa Resources i.e., Targa Resources and TC Energy go up and down completely randomly.

Pair Corralation between Targa Resources and TC Energy

Assuming the 90 days horizon Targa Resources Corp is expected to generate 1.31 times more return on investment than TC Energy. However, Targa Resources is 1.31 times more volatile than TC Energy. It trades about 0.0 of its potential returns per unit of risk. TC Energy is currently generating about -0.01 per unit of risk. If you would invest  14,811  in Targa Resources Corp on April 21, 2025 and sell it today you would lose (111.00) from holding Targa Resources Corp or give up 0.75% of portfolio value over 90 days.

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

Targa Resources Corp  vs.  TC Energy

Targa Resources Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Targa Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Targa Resources is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

TC Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days TC Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, TC Energy is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Targa Resources and TC Energy

The main advantage of trading using opposite Targa Resources and TC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Targa Resources 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 Targa Resources Corp and TC Energy 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.