Correlation Between TC Energy and Telus Corp

Can any of the company-specific risk be diversified away by investing in both TC Energy 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 TC Energy and Telus Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TC Energy Corp and Telus Corp, you can compare the effects of market volatilities on TC Energy 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 TC Energy with a short position of Telus Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of TC Energy and Telus Corp.

Diversification Opportunities for TC Energy and Telus Corp

0.17

Correlation Coefficient

TC Energy  Telus Corp

Average diversification

The 3 months correlation between TRP and Telus is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding TC Energy Corp and Telus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telus Corp and TC Energy 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 TC Energy Corp 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 TC Energy i.e., TC Energy and Telus Corp go up and down completely randomly.

Pair Corralation between TC Energy and Telus Corp

Assuming the 90 days trading horizon TC Energy Corp is expected to under-perform the Telus Corp. But the stock apears to be less risky and, when comparing its historical volatility, TC Energy Corp is 1.03 times less risky than Telus Corp. The stock trades about -0.22 of its potential returns per unit of risk. The Telus Corp is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  2,315  in Telus Corp on February 2, 2024 and sell it today you would lose (83.00) from holding Telus Corp or give up 3.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

TC Energy Corp  vs.  Telus Corp

TC Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TC Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, TC Energy is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Telus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Telus Corp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with TC Energy and Telus Corp

The main advantage of trading using opposite TC Energy and Telus Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TC Energy 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 TC Energy Corp 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.