Correlation Between Lumine and BCE
Can any of the company-specific risk be diversified away by investing in both Lumine 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 Lumine and BCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumine Group and BCE Inc Pref, you can compare the effects of market volatilities on Lumine 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 Lumine with a short position of BCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumine and BCE.
Diversification Opportunities for Lumine and BCE
Very good diversification
The 3 months correlation between Lumine and BCE is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Lumine Group 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 Lumine 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 Lumine Group 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 Lumine i.e., Lumine and BCE go up and down completely randomly.
Pair Corralation between Lumine and BCE
Assuming the 90 days horizon Lumine Group is expected to under-perform the BCE. In addition to that, Lumine is 2.84 times more volatile than BCE Inc Pref. It trades about -0.15 of its total potential returns per unit of risk. BCE Inc Pref is currently generating about 0.4 per unit of volatility. If you would invest 1,635 in BCE Inc Pref on November 2, 2024 and sell it today you would earn a total of 105.00 from holding BCE Inc Pref or generate 6.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lumine Group vs. BCE Inc Pref
Performance |
| Timeline |
| Lumine Group |
| BCE Inc Pref |
Lumine and BCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumine and BCE
The main advantage of trading using opposite Lumine and BCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumine 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.| Lumine vs. Topicus | Lumine vs. Constellation Software | Lumine vs. Brookfield | Lumine vs. Brookfield Asset Management |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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