Correlation Between Liberty Global and BCE
Can any of the company-specific risk be diversified away by investing in both Liberty Global 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 Liberty Global and BCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Global PLC and BCE Inc, you can compare the effects of market volatilities on Liberty Global 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 Liberty Global with a short position of BCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Global and BCE.
Diversification Opportunities for Liberty Global and BCE
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Liberty and BCE is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Global PLC and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc and Liberty Global 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 Liberty Global PLC 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 Liberty Global i.e., Liberty Global and BCE go up and down completely randomly.
Pair Corralation between Liberty Global and BCE
Assuming the 90 days horizon Liberty Global PLC is expected to generate 6.42 times more return on investment than BCE. However, Liberty Global is 6.42 times more volatile than BCE Inc. It trades about 0.03 of its potential returns per unit of risk. BCE Inc is currently generating about 0.07 per unit of risk. If you would invest 1,029 in Liberty Global PLC on November 18, 2024 and sell it today you would lose (95.00) from holding Liberty Global PLC or give up 9.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Global PLC vs. BCE Inc
Performance |
| Timeline |
| Liberty Global PLC |
| BCE Inc |
Liberty Global and BCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Global and BCE
The main advantage of trading using opposite Liberty Global and BCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Global 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.| Liberty Global vs. Liberty Global PLC | Liberty Global vs. Liberty Latin America | Liberty Global vs. Liberty Latin America | Liberty Global vs. Liberty Broadband Srs |
| BCE vs. Rogers Communications | BCE vs. America Movil SAB | BCE vs. Telus Corp | BCE vs. Telefonica Brasil SA |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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