Correlation Between Enbridge and Telus Corp
Can any of the company-specific risk be diversified away by investing in both Enbridge 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 Enbridge and Telus Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enbridge and Telus Corp, you can compare the effects of market volatilities on Enbridge 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 Enbridge with a short position of Telus Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge and Telus Corp.
Diversification Opportunities for Enbridge and Telus Corp
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Enbridge and Telus is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge and Telus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telus Corp and Enbridge 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 Enbridge 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 Enbridge i.e., Enbridge and Telus Corp go up and down completely randomly.
Pair Corralation between Enbridge and Telus Corp
Assuming the 90 days trading horizon Enbridge is expected to generate 0.7 times more return on investment than Telus Corp. However, Enbridge is 1.42 times less risky than Telus Corp. It trades about 0.36 of its potential returns per unit of risk. Telus Corp is currently generating about -0.13 per unit of risk. If you would invest 5,594 in Enbridge on August 28, 2024 and sell it today you would earn a total of 407.00 from holding Enbridge or generate 7.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enbridge vs. Telus Corp
Performance |
| Timeline |
| Enbridge |
| Telus Corp |
Enbridge and Telus Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enbridge and Telus Corp
The main advantage of trading using opposite Enbridge and Telus Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge 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.| Enbridge vs. Suncor Energy | Enbridge vs. Toronto Dominion Bank | Enbridge vs. Bank of Nova | Enbridge vs. BCE Inc |
| Telus Corp vs. BCE Inc | Telus Corp vs. Fortis Inc | Telus Corp vs. Enbridge | Telus Corp vs. Toronto Dominion Bank |
Check out your portfolio center.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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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