Correlation Between Telus Corp and Leons Furniture
Can any of the company-specific risk be diversified away by investing in both Telus Corp and Leons Furniture 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 Leons Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telus Corp and Leons Furniture Limited, you can compare the effects of market volatilities on Telus Corp and Leons Furniture 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 Leons Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telus Corp and Leons Furniture.
Diversification Opportunities for Telus Corp and Leons Furniture
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Telus and Leons is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Telus Corp and Leons Furniture Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leons Furniture 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 Leons Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leons Furniture has no effect on the direction of Telus Corp i.e., Telus Corp and Leons Furniture go up and down completely randomly.
Pair Corralation between Telus Corp and Leons Furniture
Given the investment horizon of 90 days Telus Corp is expected to under-perform the Leons Furniture. But the stock apears to be less risky and, when comparing its historical volatility, Telus Corp is 1.84 times less risky than Leons Furniture. The stock trades about -0.01 of its potential returns per unit of risk. The Leons Furniture Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,982 in Leons Furniture Limited on August 31, 2024 and sell it today you would earn a total of 730.00 from holding Leons Furniture Limited or generate 36.83% 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. Leons Furniture Limited
Performance |
| Timeline |
| Telus Corp |
| Leons Furniture |
Telus Corp and Leons Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telus Corp and Leons Furniture
The main advantage of trading using opposite Telus Corp and Leons Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telus Corp position performs unexpectedly, Leons Furniture 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 Leons Furniture will offset losses from the drop in Leons Furniture's long position.| Telus Corp vs. BCE Inc | Telus Corp vs. Fortis Inc | Telus Corp vs. Enbridge | Telus Corp vs. Toronto Dominion Bank |
| Leons Furniture vs. Berkshire Hathaway CDR | Leons Furniture vs. JPMorgan Chase Co | Leons Furniture vs. Bank of America | Leons Furniture vs. Alphabet Inc CDR |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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