Correlation Between Big Rock and BCE
Can any of the company-specific risk be diversified away by investing in both Big Rock and BCE 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 Big Rock and BCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Rock Brewery and BCE Inc Pref, you can compare the effects of market volatilities on Big Rock and BCE 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 Big Rock with a short position of BCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Rock and BCE.
Diversification Opportunities for Big Rock and BCE
Weak diversification
The 3 months correlation between Big and BCE is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Big Rock Brewery and BCE Inc Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc Pref and Big Rock 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 Big Rock Brewery are associated (or correlated) with BCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCE Inc Pref has no effect on the direction of Big Rock i.e., Big Rock and BCE go up and down completely randomly.
Pair Corralation between Big Rock and BCE
Assuming the 90 days horizon Big Rock Brewery is expected to generate 9.7 times more return on investment than BCE. However, Big Rock is 9.7 times more volatile than BCE Inc Pref. It trades about 0.11 of its potential returns per unit of risk. BCE Inc Pref is currently generating about 0.63 per unit of risk. If you would invest 112.00 in Big Rock Brewery on October 25, 2024 and sell it today you would earn a total of 13.00 from holding Big Rock Brewery or generate 11.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big Rock Brewery vs. BCE Inc Pref
Performance |
| Timeline |
| Big Rock Brewery |
| BCE Inc Pref |
Big Rock and BCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Rock and BCE
The main advantage of trading using opposite Big Rock and BCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Rock position performs unexpectedly, BCE 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 BCE will offset losses from the drop in BCE's long position.| Big Rock vs. Corby Spirit and | Big Rock vs. Gamehost | Big Rock vs. Andrew Peller Limited | Big Rock vs. Buhler Industries |
| BCE vs. Cogeco Communications | BCE vs. Sparx Technology | BCE vs. Brookfield Office Properties | BCE vs. Datable Technology 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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