Correlation Between Verizon Communications and TC Energy

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

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

Diversification Opportunities for Verizon Communications and TC Energy

-0.56

Correlation Coefficient

Verizon Communications  TC Energy

Excellent diversification

The 3 months correlation between Verizon and TRP-PI is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications CDR 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 Verizon Communications 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 Verizon Communications CDR 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 Verizon Communications i.e., Verizon Communications and TC Energy go up and down completely randomly.

Pair Corralation between Verizon Communications and TC Energy

Assuming the 90 days trading horizon Verizon Communications is expected to generate 38.03 times less return on investment than TC Energy. In addition to that, Verizon Communications is 1.23 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 0.36 per unit of volatility. If you would invest  1,420  in TC Energy Corp on April 23, 2025 and sell it today you would earn a total of  365.00  from holding TC Energy Corp or generate 25.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Verizon Communications CDR  vs.  TC Energy Corp

Verizon Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Verizon Communications CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Verizon Communications 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

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in TC Energy Corp are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, TC Energy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Verizon Communications and TC Energy

The main advantage of trading using opposite Verizon Communications and TC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications 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 Verizon Communications CDR 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 Stocks Directory module to find actively traded stocks across global markets.