Correlation Between BCE and Baylin Technologies
Can any of the company-specific risk be diversified away by investing in both BCE and Baylin Technologies 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 Baylin Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BCE Inc and Baylin Technologies, you can compare the effects of market volatilities on BCE and Baylin Technologies 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 Baylin Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCE and Baylin Technologies.
Diversification Opportunities for BCE and Baylin Technologies
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BCE and Baylin is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and Baylin Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baylin Technologies 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 Baylin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baylin Technologies has no effect on the direction of BCE i.e., BCE and Baylin Technologies go up and down completely randomly.
Pair Corralation between BCE and Baylin Technologies
Assuming the 90 days horizon BCE is expected to generate 181.9 times less return on investment than Baylin Technologies. But when comparing it to its historical volatility, BCE Inc is 93.81 times less risky than Baylin Technologies. It trades about 0.03 of its potential returns per unit of risk. Baylin Technologies is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 29.00 in Baylin Technologies on September 2, 2024 and sell it today you would earn a total of 7.00 from holding Baylin Technologies or generate 24.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
BCE Inc vs. Baylin Technologies
Performance |
| Timeline |
| BCE Inc |
| Baylin Technologies |
BCE and Baylin Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BCE and Baylin Technologies
The main advantage of trading using opposite BCE and Baylin Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCE position performs unexpectedly, Baylin Technologies 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 Baylin Technologies will offset losses from the drop in Baylin Technologies' long position.The idea behind BCE Inc and Baylin Technologies 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.| Baylin Technologies vs. BCE Inc | Baylin Technologies vs. Axiologix | Baylin Technologies vs. Advanced Info Service | Baylin Technologies vs. HUMANA INC |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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