Correlation Between BCE and China Aircraft
Can any of the company-specific risk be diversified away by investing in both BCE and China Aircraft 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 China Aircraft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BCE Inc and China Aircraft Leasing, you can compare the effects of market volatilities on BCE and China Aircraft 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 China Aircraft. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCE and China Aircraft.
Diversification Opportunities for BCE and China Aircraft
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BCE and China is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and China Aircraft Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Aircraft Leasing 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 China Aircraft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Aircraft Leasing has no effect on the direction of BCE i.e., BCE and China Aircraft go up and down completely randomly.
Pair Corralation between BCE and China Aircraft
Considering the 90-day investment horizon BCE Inc is expected to under-perform the China Aircraft. But the stock apears to be less risky and, when comparing its historical volatility, BCE Inc is 3.8 times less risky than China Aircraft. The stock trades about -0.09 of its potential returns per unit of risk. The China Aircraft Leasing is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 14.00 in China Aircraft Leasing on August 31, 2024 and sell it today you would earn a total of 26.00 from holding China Aircraft Leasing or generate 185.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
BCE Inc vs. China Aircraft Leasing
Performance |
| Timeline |
| BCE Inc |
| China Aircraft Leasing |
BCE and China Aircraft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BCE and China Aircraft
The main advantage of trading using opposite BCE and China Aircraft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCE position performs unexpectedly, China Aircraft 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 China Aircraft will offset losses from the drop in China Aircraft's long position.| BCE vs. RLJ Lodging Trust | BCE vs. Aquagold International | BCE vs. Stepstone Group | BCE vs. Morningstar Unconstrained Allocation |
| China Aircraft vs. Skechers USA | China Aircraft vs. United Homes Group | China Aircraft vs. Procter Gamble | China Aircraft vs. Church Dwight |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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