Correlation Between Telus Corp and BCE

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

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

Diversification Opportunities for Telus Corp and BCE

0.85

Correlation Coefficient

Telus Corp  BCE

Very poor diversification

The 3 months correlation between Telus and BCE is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Telus Corp and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE 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 BCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCE Inc has no effect on the direction of Telus Corp i.e., Telus Corp and BCE go up and down completely randomly.

Pair Corralation between Telus Corp and BCE

Allowing for the 90-day total investment horizon Telus Corp is expected to generate 0.72 times more return on investment than BCE. However, Telus Corp is 1.39 times less risky than BCE. It trades about 0.02 of its potential returns per unit of risk. BCE Inc is currently generating about -0.1 per unit of risk. If you would invest  1,522  in Telus Corp on November 19, 2024 and sell it today you would earn a total of  16.00  from holding Telus Corp or generate 1.05% return on investment over 90 days.

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

Telus Corp  vs.  BCE Inc

Telus Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Telus Corp are ranked lower than 1 (%) 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.

BCE Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days BCE Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Telus Corp and BCE

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

The idea behind Telus Corp and BCE 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.