Correlation Between BCE and Stratasys

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

Diversification Opportunities for BCE and Stratasys

-0.86
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between BCE and Stratasys is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and Stratasys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stratasys 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 Stratasys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stratasys has no effect on the direction of BCE i.e., BCE and Stratasys go up and down completely randomly.

Pair Corralation between BCE and Stratasys

Considering the 90-day investment horizon BCE Inc is expected to under-perform the Stratasys. But the stock apears to be less risky and, when comparing its historical volatility, BCE Inc is 2.97 times less risky than Stratasys. The stock trades about -0.38 of its potential returns per unit of risk. The Stratasys is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  736.00  in Stratasys on September 18, 2024 and sell it today you would earn a total of  288.00  from holding Stratasys or generate 39.13% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

BCE Inc  vs.  Stratasys

 Performance 
       Timeline  
BCE Inc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 uncertain performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Stratasys 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Stratasys are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Stratasys unveiled solid returns over the last few months and may actually be approaching a breakup point.

BCE and Stratasys Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BCE and Stratasys

The main advantage of trading using opposite BCE and Stratasys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCE position performs unexpectedly, Stratasys 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 Stratasys will offset losses from the drop in Stratasys' long position.
The idea behind BCE Inc and Stratasys 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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