Correlation Between Telus Corp and Boralex

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

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

Diversification Opportunities for Telus Corp and Boralex

0.54

Correlation Coefficient

Telus Corp  Boralex

Very weak diversification

The 3 months correlation between Telus and Boralex is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Telus Corp and Boralex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boralex and Telus Corp 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 Telus Corp are associated (or correlated) with Boralex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boralex has no effect on the direction of Telus Corp i.e., Telus Corp and Boralex go up and down completely randomly.

Pair Corralation between Telus Corp and Boralex

Given the investment horizon of 90 days Telus Corp is expected to generate 0.65 times more return on investment than Boralex. However, Telus Corp is 1.54 times less risky than Boralex. It trades about 0.03 of its potential returns per unit of risk. Boralex is currently generating about -0.07 per unit of risk. If you would invest  2,017  in Telus Corp on September 15, 2024 and sell it today you would earn a total of  56.00  from holding Telus Corp or generate 2.78% return on investment over 90 days.

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

Telus Corp  vs.  Boralex

Telus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telus Corp 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.

Boralex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boralex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Telus Corp and Boralex

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

The idea behind Telus Corp and Boralex 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.