Correlation Between BCE and Liberty Global
Can any of the company-specific risk be diversified away by investing in both BCE and Liberty Global 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 Liberty Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BCE Inc and Liberty Global PLC, you can compare the effects of market volatilities on BCE and Liberty Global 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 Liberty Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCE and Liberty Global.
Diversification Opportunities for BCE and Liberty Global
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BCE and Liberty is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and Liberty Global PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Global PLC 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 Liberty Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Global PLC has no effect on the direction of BCE i.e., BCE and Liberty Global go up and down completely randomly.
Pair Corralation between BCE and Liberty Global
Considering the 90-day investment horizon BCE Inc is expected to under-perform the Liberty Global. But the stock apears to be less risky and, when comparing its historical volatility, BCE Inc is 1.58 times less risky than Liberty Global. The stock trades about -0.1 of its potential returns per unit of risk. The Liberty Global PLC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 828.00 in Liberty Global PLC on August 24, 2024 and sell it today you would earn a total of 498.00 from holding Liberty Global PLC or generate 60.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BCE Inc vs. Liberty Global PLC
Performance |
| Timeline |
| BCE Inc |
| Liberty Global PLC |
BCE and Liberty Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BCE and Liberty Global
The main advantage of trading using opposite BCE and Liberty Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCE position performs unexpectedly, Liberty Global 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 Liberty Global will offset losses from the drop in Liberty Global's long position.The idea behind BCE Inc and Liberty Global PLC 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.| Liberty Global vs. Liberty Global PLC | Liberty Global vs. Liberty Latin America | Liberty Global vs. Liberty Latin America | Liberty Global 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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