Correlation Between BCE and SOUTHERN
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By analyzing existing cross correlation between BCE Inc and SOUTHERN CALIF EDISON, you can compare the effects of market volatilities on BCE and SOUTHERN 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 SOUTHERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCE and SOUTHERN.
Diversification Opportunities for BCE and SOUTHERN
Significant diversification
The 3 months correlation between BCE and SOUTHERN is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and SOUTHERN CALIF EDISON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHERN CALIF EDISON 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 SOUTHERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOUTHERN CALIF EDISON has no effect on the direction of BCE i.e., BCE and SOUTHERN go up and down completely randomly.
Pair Corralation between BCE and SOUTHERN
Considering the 90-day investment horizon BCE Inc is expected to under-perform the SOUTHERN. But the stock apears to be less risky and, when comparing its historical volatility, BCE Inc is 75.28 times less risky than SOUTHERN. The stock trades about -0.06 of its potential returns per unit of risk. The SOUTHERN CALIF EDISON is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 9,931 in SOUTHERN CALIF EDISON on September 12, 2024 and sell it today you would lose (869.00) from holding SOUTHERN CALIF EDISON or give up 8.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 59.6% |
| Values | Daily Returns |
BCE Inc vs. SOUTHERN CALIF EDISON
Performance |
| Timeline |
| BCE Inc |
| SOUTHERN CALIF EDISON |
BCE and SOUTHERN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BCE and SOUTHERN
The main advantage of trading using opposite BCE and SOUTHERN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCE position performs unexpectedly, SOUTHERN 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 SOUTHERN will offset losses from the drop in SOUTHERN's long position.The idea behind BCE Inc and SOUTHERN CALIF EDISON 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.| SOUTHERN vs. Diageo PLC ADR | SOUTHERN vs. BCE Inc | SOUTHERN vs. Perseus Mining Limited | SOUTHERN vs. NETGEAR |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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