Correlation Between Telus Corp and IDT

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

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

Diversification Opportunities for Telus Corp and IDT

-0.54

Correlation Coefficient

Telus Corp  IDT

Excellent diversification

The 3 months correlation between Telus and IDT is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Telus Corp and IDT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDT Corporation 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 IDT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDT Corporation has no effect on the direction of Telus Corp i.e., Telus Corp and IDT go up and down completely randomly.

Pair Corralation between Telus Corp and IDT

Allowing for the 90-day total investment horizon Telus Corp is expected to generate 0.76 times more return on investment than IDT. However, Telus Corp is 1.31 times less risky than IDT. It trades about 0.07 of its potential returns per unit of risk. IDT Corporation is currently generating about -0.31 per unit of risk. If you would invest  1,589  in Telus Corp on February 1, 2024 and sell it today you would earn a total of  18.00  from holding Telus Corp or generate 1.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Telus Corp  vs.  IDT 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 uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

IDT Corporation

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days IDT Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, IDT is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Telus Corp and IDT

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

The idea behind Telus Corp and IDT Corporation 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.