Correlation Between Bombardier and BlackBerry
Can any of the company-specific risk be diversified away by investing in both Bombardier and BlackBerry 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 Bombardier and BlackBerry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bombardier and BlackBerry, you can compare the effects of market volatilities on Bombardier and BlackBerry 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 Bombardier with a short position of BlackBerry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bombardier and BlackBerry.
Diversification Opportunities for Bombardier and BlackBerry
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bombardier and BlackBerry is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bombardier and BlackBerry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackBerry and Bombardier 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 Bombardier are associated (or correlated) with BlackBerry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackBerry has no effect on the direction of Bombardier i.e., Bombardier and BlackBerry go up and down completely randomly.
Pair Corralation between Bombardier and BlackBerry
Assuming the 90 days trading horizon Bombardier is expected to generate 0.86 times more return on investment than BlackBerry. However, Bombardier is 1.16 times less risky than BlackBerry. It trades about 0.06 of its potential returns per unit of risk. BlackBerry is currently generating about -0.04 per unit of risk. If you would invest 6,752 in Bombardier on August 26, 2024 and sell it today you would earn a total of 3,613 from holding Bombardier or generate 53.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bombardier vs. BlackBerry
Performance |
| Timeline |
| Bombardier |
| BlackBerry |
Bombardier and BlackBerry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bombardier and BlackBerry
The main advantage of trading using opposite Bombardier and BlackBerry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bombardier position performs unexpectedly, BlackBerry 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 BlackBerry will offset losses from the drop in BlackBerry's long position.| Bombardier vs. BlackBerry | Bombardier vs. Air Canada | Bombardier vs. Suncor Energy | Bombardier vs. Manulife Financial Corp |
| BlackBerry vs. Air Canada | BlackBerry vs. Lightspeed Commerce | BlackBerry vs. Shopify | BlackBerry vs. Suncor Energy |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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