Correlation Between BlackBerry and Bombardier

Can any of the company-specific risk be diversified away by investing in both BlackBerry and Bombardier 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 BlackBerry and Bombardier into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BlackBerry and Bombardier, you can compare the effects of market volatilities on BlackBerry and Bombardier 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 BlackBerry with a short position of Bombardier. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackBerry and Bombardier.

Diversification Opportunities for BlackBerry and Bombardier

0.2

Correlation Coefficient

BlackBerry  Bombardier

Modest diversification

The 3 months correlation between BlackBerry and Bombardier is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding BlackBerry and Bombardier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bombardier and BlackBerry 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 BlackBerry are associated (or correlated) with Bombardier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bombardier has no effect on the direction of BlackBerry i.e., BlackBerry and Bombardier go up and down completely randomly.

Pair Corralation between BlackBerry and Bombardier

Assuming the 90 days horizon BlackBerry is expected to generate 1.24 times more return on investment than Bombardier. However, BlackBerry is 1.24 times more volatile than Bombardier. It trades about 0.09 of its potential returns per unit of risk. Bombardier is currently generating about 0.09 per unit of risk. If you would invest  337.00  in BlackBerry on September 12, 2024 and sell it today you would earn a total of  57.00  from holding BlackBerry or generate 16.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

BlackBerry  vs.  Bombardier

BlackBerry

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BlackBerry are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BlackBerry displayed solid returns over the last few months and may actually be approaching a breakup point.

Bombardier

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bombardier are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Bombardier unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BlackBerry and Bombardier

The main advantage of trading using opposite BlackBerry and Bombardier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackBerry position performs unexpectedly, Bombardier 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 Bombardier will offset losses from the drop in Bombardier's long position.

The idea behind BlackBerry and Bombardier pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.