Correlation Between Eros Resources and BCE
Can any of the company-specific risk be diversified away by investing in both Eros Resources 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 Eros Resources and BCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eros Resources Corp and BCE Inc, you can compare the effects of market volatilities on Eros Resources 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 Eros Resources with a short position of BCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eros Resources and BCE.
Diversification Opportunities for Eros Resources and BCE
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eros and BCE is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Eros Resources Corp and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc and Eros Resources 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 Eros Resources Corp 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 Eros Resources i.e., Eros Resources and BCE go up and down completely randomly.
Pair Corralation between Eros Resources and BCE
Assuming the 90 days horizon Eros Resources Corp is expected to generate 2.85 times more return on investment than BCE. However, Eros Resources is 2.85 times more volatile than BCE Inc. It trades about -0.13 of its potential returns per unit of risk. BCE Inc is currently generating about -0.37 per unit of risk. If you would invest 5.00 in Eros Resources Corp on August 28, 2024 and sell it today you would lose (1.00) from holding Eros Resources Corp or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eros Resources Corp vs. BCE Inc
Performance |
| Timeline |
| Eros Resources Corp |
| BCE Inc |
Eros Resources and BCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eros Resources and BCE
The main advantage of trading using opposite Eros Resources and BCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eros Resources 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.| Eros Resources vs. Evertz Technologies Limited | Eros Resources vs. Sparx Technology | Eros Resources vs. CVW CleanTech | Eros Resources vs. Firan Technology Group |
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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