Correlation Between Herc Holdings and BCE
Can any of the company-specific risk be diversified away by investing in both Herc 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 Herc Holdings and BCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herc Holdings and BCE Inc, you can compare the effects of market volatilities on Herc 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 Herc Holdings with a short position of BCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herc Holdings and BCE.
Diversification Opportunities for Herc Holdings and BCE
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Herc and BCE is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Herc Holdings and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc and Herc 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 Herc 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 Herc Holdings i.e., Herc Holdings and BCE go up and down completely randomly.
Pair Corralation between Herc Holdings and BCE
Considering the 90-day investment horizon Herc Holdings is expected to under-perform the BCE. In addition to that, Herc Holdings is 1.96 times more volatile than BCE Inc. It trades about -0.42 of its total potential returns per unit of risk. BCE Inc is currently generating about -0.65 per unit of volatility. If you would invest 2,629 in BCE Inc on October 1, 2024 and sell it today you would lose (363.00) from holding BCE Inc or give up 13.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Herc Holdings vs. BCE Inc
Performance |
| Timeline |
| Herc Holdings |
| BCE Inc |
Herc Holdings and BCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herc Holdings and BCE
The main advantage of trading using opposite Herc Holdings and BCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herc 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.| Herc Holdings vs. McGrath RentCorp | Herc Holdings vs. Alta Equipment Group | Herc Holdings vs. Custom Truck One | Herc Holdings vs. GATX Corporation |
| BCE vs. Grab Holdings | BCE vs. Cadence Design Systems | BCE vs. Aquagold International | BCE vs. Morningstar Unconstrained Allocation |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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