Correlation Between Telus Corp and Pembina Pipeline

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

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

Diversification Opportunities for Telus Corp and Pembina Pipeline

0.6

Correlation Coefficient

Telus Corp  Pembina Pipeline

Poor diversification

The 3 months correlation between Telus and Pembina is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Telus Corp and Pembina Pipeline Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pembina Pipeline Corp 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 Pembina Pipeline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pembina Pipeline Corp has no effect on the direction of Telus Corp i.e., Telus Corp and Pembina Pipeline go up and down completely randomly.

Pair Corralation between Telus Corp and Pembina Pipeline

Given the investment horizon of 90 days Telus Corp is expected to under-perform the Pembina Pipeline. In addition to that, Telus Corp is 1.16 times more volatile than Pembina Pipeline Corp. It trades about -0.01 of its total potential returns per unit of risk. Pembina Pipeline Corp is currently generating about 0.07 per unit of volatility. If you would invest  4,035  in Pembina Pipeline Corp on September 26, 2024 and sell it today you would earn a total of  1,270  from holding Pembina Pipeline Corp or generate 31.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Telus Corp  vs.  Pembina Pipeline Corp

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 latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pembina Pipeline Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Telus Corp and Pembina Pipeline

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

The idea behind Telus Corp and Pembina Pipeline 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..