Correlation Between BCE and Laurentian Bank
Can any of the company-specific risk be diversified away by investing in both BCE and Laurentian Bank 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 BCE and Laurentian Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BCE Inc Pref and Laurentian Bank, you can compare the effects of market volatilities on BCE and Laurentian Bank 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 BCE with a short position of Laurentian Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCE and Laurentian Bank.
Diversification Opportunities for BCE and Laurentian Bank
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BCE and Laurentian is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc Pref and Laurentian Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laurentian Bank and BCE 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 BCE Inc Pref are associated (or correlated) with Laurentian Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laurentian Bank has no effect on the direction of BCE i.e., BCE and Laurentian Bank go up and down completely randomly.
Pair Corralation between BCE and Laurentian Bank
Assuming the 90 days trading horizon BCE Inc Pref is expected to generate 0.71 times more return on investment than Laurentian Bank. However, BCE Inc Pref is 1.4 times less risky than Laurentian Bank. It trades about 0.36 of its potential returns per unit of risk. Laurentian Bank is currently generating about -0.06 per unit of risk. If you would invest 1,652 in BCE Inc Pref on November 3, 2024 and sell it today you would earn a total of 95.00 from holding BCE Inc Pref or generate 5.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BCE Inc Pref vs. Laurentian Bank
Performance |
| Timeline |
| BCE Inc Pref |
| Laurentian Bank |
BCE and Laurentian Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BCE and Laurentian Bank
The main advantage of trading using opposite BCE and Laurentian Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCE position performs unexpectedly, Laurentian Bank 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 Laurentian Bank will offset losses from the drop in Laurentian Bank's long position.| BCE vs. Partners Value Investments | BCE vs. Westshore Terminals Investment | BCE vs. Birchtech Corp | BCE vs. Kootenay Silver |
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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