Correlation Between BCE and 049560AW5

Can any of the company-specific risk be diversified away by investing in both BCE and 049560AW5 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 049560AW5 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BCE Inc and ATO 285 15 FEB 52, you can compare the effects of market volatilities on BCE and 049560AW5 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 049560AW5. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCE and 049560AW5.

Diversification Opportunities for BCE and 049560AW5

0.41

Correlation Coefficient

BCE  049560AW5

Very weak diversification

The 3 months correlation between BCE and 049560AW5 is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and ATO 285 15 FEB 52 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATO 285 15 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 049560AW5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATO 285 15 has no effect on the direction of BCE i.e., BCE and 049560AW5 go up and down completely randomly.

Pair Corralation between BCE and 049560AW5

Considering the 90-day investment horizon BCE Inc is expected to under-perform the 049560AW5. But the stock apears to be less risky and, when comparing its historical volatility, BCE Inc is 1.47 times less risky than 049560AW5. The stock trades about -0.09 of its potential returns per unit of risk. The ATO 285 15 FEB 52 is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  6,708  in ATO 285 15 FEB 52 on September 26, 2024 and sell it today you would lose (91.00) from holding ATO 285 15 FEB 52 or give up 1.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	48.99%
Values	Daily Returns

BCE Inc  vs.  ATO 285 15 FEB 52

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 weak 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.

ATO 285 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATO 285 15 FEB 52 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 049560AW5 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BCE and 049560AW5

The main advantage of trading using opposite BCE and 049560AW5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCE position performs unexpectedly, 049560AW5 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 049560AW5 will offset losses from the drop in 049560AW5's long position.

The idea behind BCE Inc and ATO 285 15 FEB 52 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.