Correlation Between Airtel Africa and BCE
Can any of the company-specific risk be diversified away by investing in both Airtel Africa and BCE 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 Airtel Africa and BCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Airtel Africa Plc and BCE Inc, you can compare the effects of market volatilities on Airtel Africa and BCE 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 Airtel Africa with a short position of BCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airtel Africa and BCE.
Diversification Opportunities for Airtel Africa and BCE
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Airtel and BCE is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Airtel Africa Plc and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc and Airtel Africa 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 Airtel Africa Plc are associated (or correlated) with BCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCE Inc has no effect on the direction of Airtel Africa i.e., Airtel Africa and BCE go up and down completely randomly.
Pair Corralation between Airtel Africa and BCE
Assuming the 90 days horizon Airtel Africa Plc is expected to under-perform the BCE. In addition to that, Airtel Africa is 4.87 times more volatile than BCE Inc. It trades about -0.19 of its total potential returns per unit of risk. BCE Inc is currently generating about 0.21 per unit of volatility. If you would invest 1,069 in BCE Inc on August 25, 2024 and sell it today you would earn a total of 31.00 from holding BCE Inc or generate 2.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Airtel Africa Plc vs. BCE Inc
Performance |
| Timeline |
| Airtel Africa Plc |
| BCE Inc |
Airtel Africa and BCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airtel Africa and BCE
The main advantage of trading using opposite Airtel Africa and BCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airtel Africa position performs unexpectedly, BCE 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 BCE will offset losses from the drop in BCE's long position.| Airtel Africa vs. Pinterest | Airtel Africa vs. CDW Corp | Airtel Africa vs. Shake Shack | Airtel Africa vs. Kura Sushi USA |
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 CEOs Directory module to screen CEOs from public companies around the world.
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