Correlation Between BCE and EMCOR
Can any of the company-specific risk be diversified away by investing in both BCE and EMCOR 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 EMCOR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BCE Inc and EMCOR Group, you can compare the effects of market volatilities on BCE and EMCOR 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 EMCOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCE and EMCOR.
Diversification Opportunities for BCE and EMCOR
Pay attention - limited upside
The 3 months correlation between BCE and EMCOR is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and EMCOR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCOR Group 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 EMCOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCOR Group has no effect on the direction of BCE i.e., BCE and EMCOR go up and down completely randomly.
Pair Corralation between BCE and EMCOR
Considering the 90-day investment horizon BCE Inc is expected to under-perform the EMCOR. In addition to that, BCE is 1.05 times more volatile than EMCOR Group. It trades about -0.36 of its total potential returns per unit of risk. EMCOR Group is currently generating about 0.37 per unit of volatility. If you would invest 43,177 in EMCOR Group on August 31, 2024 and sell it today you would earn a total of 7,618 from holding EMCOR Group or generate 17.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BCE Inc vs. EMCOR Group
Performance |
| Timeline |
| BCE Inc |
| EMCOR Group |
BCE and EMCOR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BCE and EMCOR
The main advantage of trading using opposite BCE and EMCOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCE position performs unexpectedly, EMCOR 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 EMCOR will offset losses from the drop in EMCOR's long position.| BCE vs. RLJ Lodging Trust | BCE vs. Aquagold International | BCE vs. Stepstone Group | BCE vs. Morningstar Unconstrained Allocation |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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