Correlation Between BCE and Rogers Communications

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

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

Diversification Opportunities for BCE and Rogers Communications

0.9

Correlation Coefficient

BCE  Rogers Communications

Almost no diversification

The 3 months correlation between BCE and Rogers is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and Rogers Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rogers Communications and BCE 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 BCE Inc are associated (or correlated) with Rogers Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rogers Communications has no effect on the direction of BCE i.e., BCE and Rogers Communications go up and down completely randomly.

Pair Corralation between BCE and Rogers Communications

Assuming the 90 days trading horizon BCE Inc is expected to under-perform the Rogers Communications. But the stock apears to be less risky and, when comparing its historical volatility, BCE Inc is 1.54 times less risky than Rogers Communications. The stock trades about -0.09 of its potential returns per unit of risk. The Rogers Communications is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  6,032  in Rogers Communications on September 30, 2024 and sell it today you would lose (1,264) from holding Rogers Communications or give up 20.95% of portfolio value over 90 days.

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

BCE Inc  vs.  Rogers Communications

BCE Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BCE Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Rogers Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rogers Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with BCE and Rogers Communications

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

The idea behind BCE Inc and Rogers Communications 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.