Correlation Between BCE and AMCON Distributing
Can any of the company-specific risk be diversified away by investing in both BCE and AMCON Distributing 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 AMCON Distributing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BCE Inc and AMCON Distributing, you can compare the effects of market volatilities on BCE and AMCON Distributing 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 AMCON Distributing. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCE and AMCON Distributing.
Diversification Opportunities for BCE and AMCON Distributing
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BCE and AMCON is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and AMCON Distributing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMCON Distributing 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 AMCON Distributing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMCON Distributing has no effect on the direction of BCE i.e., BCE and AMCON Distributing go up and down completely randomly.
Pair Corralation between BCE and AMCON Distributing
Considering the 90-day investment horizon BCE Inc is expected to under-perform the AMCON Distributing. But the stock apears to be less risky and, when comparing its historical volatility, BCE Inc is 2.93 times less risky than AMCON Distributing. The stock trades about -0.07 of its potential returns per unit of risk. The AMCON Distributing is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 17,822 in AMCON Distributing on August 31, 2024 and sell it today you would lose (4,340) from holding AMCON Distributing or give up 24.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.74% |
| Values | Daily Returns |
BCE Inc vs. AMCON Distributing
Performance |
| Timeline |
| BCE Inc |
| AMCON Distributing |
BCE and AMCON Distributing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BCE and AMCON Distributing
The main advantage of trading using opposite BCE and AMCON Distributing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCE position performs unexpectedly, AMCON Distributing 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 AMCON Distributing will offset losses from the drop in AMCON Distributing's long position.| BCE vs. RLJ Lodging Trust | BCE vs. Aquagold International | BCE vs. Stepstone Group | BCE vs. Morningstar Unconstrained Allocation |
| AMCON Distributing vs. The Chefs Warehouse | AMCON Distributing vs. G Willi Food International | AMCON Distributing vs. SpartanNash Co | AMCON Distributing vs. Calavo Growers |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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