Correlation Between TC Energy and Targa Resources

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

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

Diversification Opportunities for TC Energy and Targa Resources

-0.26

Correlation Coefficient

TC Energy  Targa Resources

Very good diversification

The 3 months correlation between TRS and Targa is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding TC Energy and Targa Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Targa Resources Corp 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 are associated (or correlated) with Targa Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Targa Resources Corp has no effect on the direction of TC Energy i.e., TC Energy and Targa Resources go up and down completely randomly.

Pair Corralation between TC Energy and Targa Resources

Assuming the 90 days horizon TC Energy is expected to under-perform the Targa Resources. But the stock apears to be less risky and, when comparing its historical volatility, TC Energy is 1.31 times less risky than Targa Resources. The stock trades about -0.01 of its potential returns per unit of risk. The Targa Resources Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. 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

TC Energy  vs.  Targa Resources Corp

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.

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.

Pair Trading with TC Energy and Targa Resources

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

The idea behind TC Energy and Targa Resources 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.