Correlation Between Telus Corp and Next Hydrogen
Can any of the company-specific risk be diversified away by investing in both Telus Corp and Next Hydrogen 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 Next Hydrogen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telus Corp and Next Hydrogen Solutions, you can compare the effects of market volatilities on Telus Corp and Next Hydrogen 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 Next Hydrogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telus Corp and Next Hydrogen.
Diversification Opportunities for Telus Corp and Next Hydrogen
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Telus and Next is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Telus Corp and Next Hydrogen Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Hydrogen Solutions 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 Next Hydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Hydrogen Solutions has no effect on the direction of Telus Corp i.e., Telus Corp and Next Hydrogen go up and down completely randomly.
Pair Corralation between Telus Corp and Next Hydrogen
Given the investment horizon of 90 days Telus Corp is expected to generate 6.35 times less return on investment than Next Hydrogen. But when comparing it to its historical volatility, Telus Corp is 12.04 times less risky than Next Hydrogen. It trades about 0.28 of its potential returns per unit of risk. Next Hydrogen Solutions is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 60.00 in Next Hydrogen Solutions on December 1, 2024 and sell it today you would earn a total of 18.00 from holding Next Hydrogen Solutions or generate 30.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Telus Corp vs. Next Hydrogen Solutions
Performance |
| Timeline |
| Telus Corp |
| Next Hydrogen Solutions |
Telus Corp and Next Hydrogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telus Corp and Next Hydrogen
The main advantage of trading using opposite Telus Corp and Next Hydrogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telus Corp position performs unexpectedly, Next Hydrogen 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 Next Hydrogen will offset losses from the drop in Next Hydrogen's long position.| Telus Corp vs. BCE Inc | Telus Corp vs. Fortis Inc | Telus Corp vs. Enbridge | Telus Corp vs. Toronto Dominion Bank |
| Next Hydrogen vs. Bird Construction | Next Hydrogen vs. Information Services | Next Hydrogen vs. Cogeco Communications | Next Hydrogen vs. Queens Road Capital |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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