Correlation Between Telus Corp and Emera

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

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

Diversification Opportunities for Telus Corp and Emera

-0.17

Correlation Coefficient

Telus Corp  Emera

Good diversification

The 3 months correlation between Telus and Emera is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Telus Corp and Emera Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emera Inc 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 Emera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emera Inc has no effect on the direction of Telus Corp i.e., Telus Corp and Emera go up and down completely randomly.

Pair Corralation between Telus Corp and Emera

Given the investment horizon of 90 days Telus Corp is expected to under-perform the Emera. But the stock apears to be less risky and, when comparing its historical volatility, Telus Corp is 1.04 times less risky than Emera. The stock trades about -0.02 of its potential returns per unit of risk. The Emera Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,837  in Emera Inc on October 12, 2024 and sell it today you would earn a total of  459.00  from holding Emera Inc or generate 9.49% return on investment over 90 days.

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

Telus Corp  vs.  Emera Inc

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 weak 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.

Emera Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Emera Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Emera is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Telus Corp and Emera

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

The idea behind Telus Corp and Emera Inc 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.