Correlation Between Bombardier and BlackBerry

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Can any of the company-specific risk be diversified away by investing in both Bombardier and BlackBerry 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 Bombardier and BlackBerry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bombardier and BlackBerry, you can compare the effects of market volatilities on Bombardier and BlackBerry 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 Bombardier with a short position of BlackBerry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bombardier and BlackBerry.

Diversification Opportunities for Bombardier and BlackBerry

0.3
  Correlation Coefficient

Weak diversification

The 3 months correlation between Bombardier and BlackBerry is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Bombardier and BlackBerry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackBerry and Bombardier 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 Bombardier are associated (or correlated) with BlackBerry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackBerry has no effect on the direction of Bombardier i.e., Bombardier and BlackBerry go up and down completely randomly.

Pair Corralation between Bombardier and BlackBerry

Assuming the 90 days trading horizon Bombardier is expected to generate 1.19 times less return on investment than BlackBerry. But when comparing it to its historical volatility, Bombardier is 1.05 times less risky than BlackBerry. It trades about 0.09 of its potential returns per unit of risk. BlackBerry is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  310.00  in BlackBerry on September 5, 2024 and sell it today you would earn a total of  54.00  from holding BlackBerry or generate 17.42% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Bombardier  vs.  BlackBerry

 Performance 
       Timeline  
Bombardier 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
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.
BlackBerry 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in BlackBerry are ranked lower than 8 (%) 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 and BlackBerry Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bombardier and BlackBerry

The main advantage of trading using opposite Bombardier and BlackBerry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bombardier position performs unexpectedly, BlackBerry 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 BlackBerry will offset losses from the drop in BlackBerry's long position.
The idea behind Bombardier and BlackBerry 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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