Correlation Between BCE and Kinaxis
Can any of the company-specific risk be diversified away by investing in both BCE and Kinaxis 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 Kinaxis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BCE Inc and Kinaxis, you can compare the effects of market volatilities on BCE and Kinaxis 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 Kinaxis. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCE and Kinaxis.
Diversification Opportunities for BCE and Kinaxis
Excellent diversification
The 3 months correlation between BCE and Kinaxis is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and Kinaxis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinaxis 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 are associated (or correlated) with Kinaxis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinaxis has no effect on the direction of BCE i.e., BCE and Kinaxis go up and down completely randomly.
Pair Corralation between BCE and Kinaxis
Assuming the 90 days trading horizon BCE Inc is expected to generate 0.98 times more return on investment than Kinaxis. However, BCE Inc is 1.02 times less risky than Kinaxis. It trades about 0.12 of its potential returns per unit of risk. Kinaxis is currently generating about -0.11 per unit of risk. If you would invest 3,352 in BCE Inc on November 3, 2024 and sell it today you would earn a total of 109.00 from holding BCE Inc or generate 3.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BCE Inc vs. Kinaxis
Performance |
| Timeline |
| BCE Inc |
| Kinaxis |
BCE and Kinaxis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BCE and Kinaxis
The main advantage of trading using opposite BCE and Kinaxis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCE position performs unexpectedly, Kinaxis 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 Kinaxis will offset losses from the drop in Kinaxis' long position.The idea behind BCE Inc and Kinaxis pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Kinaxis vs. Open Text Corp | Kinaxis vs. Enghouse Systems | Kinaxis vs. Docebo Inc | Kinaxis vs. Descartes Systems Group |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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