Correlation Between Telus Corp and IGM Financial

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

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

Diversification Opportunities for Telus Corp and IGM Financial

-0.44

Correlation Coefficient

Telus Corp  IGM Financial

Very good diversification

The 3 months correlation between Telus and IGM is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Telus Corp and IGM Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGM Financial 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 IGM Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IGM Financial has no effect on the direction of Telus Corp i.e., Telus Corp and IGM Financial go up and down completely randomly.

Pair Corralation between Telus Corp and IGM Financial

Given the investment horizon of 90 days Telus Corp is expected to under-perform the IGM Financial. But the stock apears to be less risky and, when comparing its historical volatility, Telus Corp is 1.11 times less risky than IGM Financial. The stock trades about -0.44 of its potential returns per unit of risk. The IGM Financial is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  4,701  in IGM Financial on October 11, 2024 and sell it today you would lose (152.00) from holding IGM Financial or give up 3.23% of portfolio value over 90 days.

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

Telus Corp  vs.  IGM Financial

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.

IGM Financial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IGM Financial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, IGM Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Telus Corp and IGM Financial

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

The idea behind Telus Corp and IGM Financial 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.