Correlation Between Bce and BCE
Can any of the company-specific risk be diversified away by investing in both Bce 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 Bce and BCE 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 BCE Inc Pref, you can compare the effects of market volatilities on Bce 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 Bce with a short position of BCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bce and BCE.
Diversification Opportunities for Bce and BCE
Almost no diversification
The 3 months correlation between Bce and BCE is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Bce Inc Pref and BCE Inc Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc Pref 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 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 Pref has no effect on the direction of Bce i.e., Bce and BCE go up and down completely randomly.
Pair Corralation between Bce and BCE
Assuming the 90 days trading horizon Bce Inc Pref is expected to under-perform the BCE. But the preferred stock apears to be less risky and, when comparing its historical volatility, Bce Inc Pref is 1.46 times less risky than BCE. The preferred stock trades about -0.18 of its potential returns per unit of risk. The BCE Inc Pref is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 1,656 in BCE Inc Pref on September 13, 2024 and sell it today you would lose (39.00) from holding BCE Inc Pref or give up 2.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bce Inc Pref vs. BCE Inc Pref
Performance |
| Timeline |
| Bce Inc Pref |
| BCE Inc Pref |
Bce and BCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bce and BCE
The main advantage of trading using opposite Bce and BCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bce 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.| Bce vs. First National Financial | Bce vs. VersaBank | Bce vs. Definity Financial Corp | Bce vs. Royal Bank of |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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