Correlation Between BCE and ATN International
Can any of the company-specific risk be diversified away by investing in both BCE and ATN International 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 ATN International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BCE Inc and ATN International, you can compare the effects of market volatilities on BCE and ATN International 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 ATN International. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCE and ATN International.
Diversification Opportunities for BCE and ATN International
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BCE and ATN is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and ATN International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATN International 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 ATN International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATN International has no effect on the direction of BCE i.e., BCE and ATN International go up and down completely randomly.
Pair Corralation between BCE and ATN International
Considering the 90-day investment horizon BCE Inc is expected to generate 0.3 times more return on investment than ATN International. However, BCE Inc is 3.33 times less risky than ATN International. It trades about -0.07 of its potential returns per unit of risk. ATN International is currently generating about -0.03 per unit of risk. If you would invest 4,068 in BCE Inc on August 24, 2024 and sell it today you would lose (1,400) from holding BCE Inc or give up 34.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BCE Inc vs. ATN International
Performance |
| Timeline |
| BCE Inc |
| ATN International |
BCE and ATN International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BCE and ATN International
The main advantage of trading using opposite BCE and ATN International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCE position performs unexpectedly, ATN International 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 ATN International will offset losses from the drop in ATN International's long position.The idea behind BCE Inc and ATN International 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.| ATN International vs. KT Corporation | ATN International vs. SK Telecom Co | ATN International vs. Ooma Inc | ATN International vs. Liberty Broadband Srs |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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