Correlation Between Telus Corp and Fortis
Can any of the company-specific risk be diversified away by investing in both Telus Corp and Fortis 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 Fortis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telus Corp and Fortis Inc, you can compare the effects of market volatilities on Telus Corp and Fortis 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 Fortis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telus Corp and Fortis.
Diversification Opportunities for Telus Corp and Fortis
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Telus and Fortis is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Telus Corp and Fortis Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortis 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 Fortis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortis Inc has no effect on the direction of Telus Corp i.e., Telus Corp and Fortis go up and down completely randomly.
Pair Corralation between Telus Corp and Fortis
Given the investment horizon of 90 days Telus Corp is expected to generate 4.53 times less return on investment than Fortis. In addition to that, Telus Corp is 1.18 times more volatile than Fortis Inc. It trades about 0.02 of its total potential returns per unit of risk. Fortis Inc is currently generating about 0.1 per unit of volatility. If you would invest 5,027 in Fortis Inc on November 4, 2024 and sell it today you would earn a total of 1,163 from holding Fortis Inc or generate 23.14% 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. Fortis Inc
Performance |
| Timeline |
| Telus Corp |
| Fortis Inc |
Telus Corp and Fortis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telus Corp and Fortis
The main advantage of trading using opposite Telus Corp and Fortis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telus Corp position performs unexpectedly, Fortis 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 Fortis will offset losses from the drop in Fortis' long position.| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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