Correlation Between Employers Holdings and BCE
Can any of the company-specific risk be diversified away by investing in both Employers Holdings 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 Employers Holdings and BCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Employers Holdings and BCE Inc, you can compare the effects of market volatilities on Employers Holdings 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 Employers Holdings with a short position of BCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Employers Holdings and BCE.
Diversification Opportunities for Employers Holdings and BCE
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Employers and BCE is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Employers Holdings and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc and Employers Holdings 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 Employers Holdings 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 has no effect on the direction of Employers Holdings i.e., Employers Holdings and BCE go up and down completely randomly.
Pair Corralation between Employers Holdings and BCE
Considering the 90-day investment horizon Employers Holdings is expected to generate 1.1 times more return on investment than BCE. However, Employers Holdings is 1.1 times more volatile than BCE Inc. It trades about 0.16 of its potential returns per unit of risk. BCE Inc is currently generating about -0.37 per unit of risk. If you would invest 4,730 in Employers Holdings on August 28, 2024 and sell it today you would earn a total of 600.00 from holding Employers Holdings or generate 12.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Employers Holdings vs. BCE Inc
Performance |
| Timeline |
| Employers Holdings |
| BCE Inc |
Employers Holdings and BCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Employers Holdings and BCE
The main advantage of trading using opposite Employers Holdings and BCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Employers Holdings 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.| Employers Holdings vs. ICC Holdings | Employers Holdings vs. AMERISAFE | Employers Holdings vs. NMI Holdings | Employers Holdings vs. Investors Title |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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