Correlation Between Core Main and Telus Corp

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

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

Diversification Opportunities for Core Main and Telus Corp

-0.43

Correlation Coefficient

Core Main  Telus Corp

Very good diversification

The 3 months correlation between Core and Telus is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Core Main and Telus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telus Corp and Core Main 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 Core Main are associated (or correlated) with Telus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telus Corp has no effect on the direction of Core Main i.e., Core Main and Telus Corp go up and down completely randomly.

Pair Corralation between Core Main and Telus Corp

Considering the 90-day investment horizon Core Main is expected to under-perform the Telus Corp. In addition to that, Core Main is 1.11 times more volatile than Telus Corp. It trades about -0.03 of its total potential returns per unit of risk. Telus Corp is currently generating about 0.07 per unit of volatility. If you would invest  1,340  in Telus Corp on December 26, 2024 and sell it today you would earn a total of  72.00  from holding Telus Corp or generate 5.37% return on investment over 90 days.

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

Core Main  vs.  Telus Corp

Core Main

Risk-Adjusted Performance

Very Weak

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

Telus Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Telus Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Telus Corp is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Core Main and Telus Corp

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

The idea behind Core Main and Telus 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.