Correlation Between Verizon Communications and Telus Corp
Can any of the company-specific risk be diversified away by investing in both Verizon Communications 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 Verizon Communications and Telus Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and Telus Corp, you can compare the effects of market volatilities on Verizon Communications 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 Verizon Communications with a short position of Telus Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and Telus Corp.
Diversification Opportunities for Verizon Communications and Telus Corp
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Verizon and Telus is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Telus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telus Corp and Verizon Communications 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 Verizon Communications 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 Verizon Communications i.e., Verizon Communications and Telus Corp go up and down completely randomly.
Pair Corralation between Verizon Communications and Telus Corp
Allowing for the 90-day total investment horizon Verizon Communications is expected to generate 1.26 times more return on investment than Telus Corp. However, Verizon Communications is 1.26 times more volatile than Telus Corp. It trades about 0.06 of its potential returns per unit of risk. Telus Corp is currently generating about -0.05 per unit of risk. If you would invest 3,617 in Verizon Communications on August 27, 2024 and sell it today you would earn a total of 698.00 from holding Verizon Communications or generate 19.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. Telus Corp
Performance |
| Timeline |
| Verizon Communications |
| Telus Corp |
Verizon Communications and Telus Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verizon Communications and Telus Corp
The main advantage of trading using opposite Verizon Communications and Telus Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications 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.The idea behind Verizon Communications and Telus Corp 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.
| Telus Corp vs. Rogers Communications | Telus Corp vs. Vodafone Group PLC | Telus Corp vs. Orange SA ADR | Telus Corp vs. America Movil SAB |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |