Correlation Between Bell Food and Telecom Plus
Can any of the company-specific risk be diversified away by investing in both Bell Food and Telecom Plus 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 Bell Food and Telecom Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bell Food Group and Telecom Plus PLC, you can compare the effects of market volatilities on Bell Food and Telecom Plus 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 Bell Food with a short position of Telecom Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bell Food and Telecom Plus.
Diversification Opportunities for Bell Food and Telecom Plus
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bell and Telecom is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Bell Food Group and Telecom Plus PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Plus PLC and Bell Food 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 Bell Food Group are associated (or correlated) with Telecom Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecom Plus PLC has no effect on the direction of Bell Food i.e., Bell Food and Telecom Plus go up and down completely randomly.
Pair Corralation between Bell Food and Telecom Plus
Assuming the 90 days trading horizon Bell Food Group is expected to generate 1.1 times more return on investment than Telecom Plus. However, Bell Food is 1.1 times more volatile than Telecom Plus PLC. It trades about -0.12 of its potential returns per unit of risk. Telecom Plus PLC is currently generating about -0.18 per unit of risk. If you would invest 26,650 in Bell Food Group on October 25, 2024 and sell it today you would lose (1,025) from holding Bell Food Group or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bell Food Group vs. Telecom Plus PLC
Performance |
| Timeline |
| Bell Food Group |
| Telecom Plus PLC |
Bell Food and Telecom Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bell Food and Telecom Plus
The main advantage of trading using opposite Bell Food and Telecom Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bell Food position performs unexpectedly, Telecom Plus 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 Telecom Plus will offset losses from the drop in Telecom Plus' long position.| Bell Food vs. STMicroelectronics NV | Bell Food vs. Rheinmetall AG | Bell Food vs. Ally Financial | Bell Food vs. Cornish Metals |
| Telecom Plus vs. Bell Food Group | Telecom Plus vs. Tyson Foods Cl | Telecom Plus vs. Fulcrum Metals PLC | Telecom Plus vs. Premier Foods PLC |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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