Correlation Between Major Drilling and BCE
Can any of the company-specific risk be diversified away by investing in both Major Drilling 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 Major Drilling and BCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Major Drilling Group and BCE Inc Pref, you can compare the effects of market volatilities on Major Drilling 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 Major Drilling with a short position of BCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and BCE.
Diversification Opportunities for Major Drilling and BCE
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Major and BCE is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling 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 Major Drilling 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 Major Drilling 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 Major Drilling i.e., Major Drilling and BCE go up and down completely randomly.
Pair Corralation between Major Drilling and BCE
Assuming the 90 days trading horizon Major Drilling Group is expected to generate 3.01 times more return on investment than BCE. However, Major Drilling is 3.01 times more volatile than BCE Inc Pref. It trades about 0.04 of its potential returns per unit of risk. BCE Inc Pref is currently generating about 0.04 per unit of risk. If you would invest 741.00 in Major Drilling Group on September 14, 2024 and sell it today you would earn a total of 123.00 from holding Major Drilling Group or generate 16.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Major Drilling Group vs. BCE Inc Pref
Performance |
| Timeline |
| Major Drilling Group |
| BCE Inc Pref |
Major Drilling and BCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and BCE
The main advantage of trading using opposite Major Drilling and BCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling 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.| Major Drilling vs. Pason Systems | Major Drilling vs. HudBay Minerals | Major Drilling vs. Ensign Energy Services | Major Drilling vs. Precision Drilling |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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