Correlation Between BCE and Kenon Holdings
Can any of the company-specific risk be diversified away by investing in both BCE and Kenon Holdings 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 Kenon Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BCE Inc and Kenon Holdings, you can compare the effects of market volatilities on BCE and Kenon Holdings 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 Kenon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCE and Kenon Holdings.
Diversification Opportunities for BCE and Kenon Holdings
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BCE and Kenon is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and Kenon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenon Holdings 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 Kenon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenon Holdings has no effect on the direction of BCE i.e., BCE and Kenon Holdings go up and down completely randomly.
Pair Corralation between BCE and Kenon Holdings
Considering the 90-day investment horizon BCE Inc is expected to under-perform the Kenon Holdings. But the stock apears to be less risky and, when comparing its historical volatility, BCE Inc is 1.81 times less risky than Kenon Holdings. The stock trades about -0.07 of its potential returns per unit of risk. The Kenon Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,167 in Kenon Holdings on November 19, 2024 and sell it today you would earn a total of 1,103 from holding Kenon Holdings or generate 50.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BCE Inc vs. Kenon Holdings
Performance |
| Timeline |
| BCE Inc |
| Kenon Holdings |
BCE and Kenon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BCE and Kenon Holdings
The main advantage of trading using opposite BCE and Kenon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCE position performs unexpectedly, Kenon Holdings 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 Kenon Holdings will offset losses from the drop in Kenon Holdings' long position.| BCE vs. Rogers Communications | BCE vs. America Movil SAB | BCE vs. Telus Corp | BCE vs. Telefonica Brasil SA |
| Kenon Holdings vs. Vistra Energy Corp | Kenon Holdings vs. Pampa Energia SA | Kenon Holdings vs. NRG Energy | Kenon Holdings vs. TransAlta Corp |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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