Correlation Between Telus Corp and FullNet Communications

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

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

Diversification Opportunities for Telus Corp and FullNet Communications

-0.14

Correlation Coefficient

Telus Corp  FullNet Communications

Good diversification

The 3 months correlation between Telus and FullNet is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Telus Corp and FullNet Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FullNet Communications 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 FullNet Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FullNet Communications has no effect on the direction of Telus Corp i.e., Telus Corp and FullNet Communications go up and down completely randomly.

Pair Corralation between Telus Corp and FullNet Communications

Allowing for the 90-day total investment horizon Telus Corp is expected to under-perform the FullNet Communications. But the stock apears to be less risky and, when comparing its historical volatility, Telus Corp is 4.93 times less risky than FullNet Communications. The stock trades about -0.08 of its potential returns per unit of risk. The FullNet Communications is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  20.00  in FullNet Communications on March 12, 2024 and sell it today you would earn a total of  5.00  from holding FullNet Communications or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	37.5%
Values	Daily Returns

Telus Corp  vs.  FullNet Communications

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 comparatively stable basic indicators, Telus Corp is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

FullNet Communications

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days FullNet Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very uncertain essential indicators, FullNet Communications displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telus Corp and FullNet Communications

The main advantage of trading using opposite Telus Corp and FullNet Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telus Corp position performs unexpectedly, FullNet Communications 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 FullNet Communications will offset losses from the drop in FullNet Communications' long position.

The idea behind Telus Corp and FullNet Communications 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.