Correlation Between BCE and AMERICAN
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By analyzing existing cross correlation between BCE Inc and AMERICAN INTL GROUP, you can compare the effects of market volatilities on BCE and AMERICAN 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 AMERICAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCE and AMERICAN.
Diversification Opportunities for BCE and AMERICAN
Poor diversification
The 3 months correlation between BCE and AMERICAN is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and AMERICAN INTL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMERICAN INTL 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 AMERICAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMERICAN INTL GROUP has no effect on the direction of BCE i.e., BCE and AMERICAN go up and down completely randomly.
Pair Corralation between BCE and AMERICAN
Considering the 90-day investment horizon BCE Inc is expected to under-perform the AMERICAN. In addition to that, BCE is 3.04 times more volatile than AMERICAN INTL GROUP. It trades about -0.06 of its total potential returns per unit of risk. AMERICAN INTL GROUP is currently generating about 0.0 per unit of volatility. If you would invest 9,764 in AMERICAN INTL GROUP on September 5, 2024 and sell it today you would lose (55.00) from holding AMERICAN INTL GROUP or give up 0.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.56% |
| Values | Daily Returns |
BCE Inc vs. AMERICAN INTL GROUP
Performance |
| Timeline |
| BCE Inc |
| AMERICAN INTL GROUP |
BCE and AMERICAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BCE and AMERICAN
The main advantage of trading using opposite BCE and AMERICAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCE position performs unexpectedly, AMERICAN 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 AMERICAN will offset losses from the drop in AMERICAN's long position.The idea behind BCE Inc and AMERICAN INTL GROUP 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.| AMERICAN vs. Boston Properties | AMERICAN vs. Smith Douglas Homes | AMERICAN vs. Boston Beer | AMERICAN vs. Ambev SA ADR |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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