Correlation Between Cymbria and BCE

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

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

Diversification Opportunities for Cymbria and BCE

-0.52

Correlation Coefficient

Cymbria  BCE

Excellent diversification

The 3 months correlation between Cymbria and BCE is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Cymbria and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc and Cymbria 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 Cymbria are associated (or correlated) with BCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCE Inc has no effect on the direction of Cymbria i.e., Cymbria and BCE go up and down completely randomly.

Pair Corralation between Cymbria and BCE

Assuming the 90 days trading horizon Cymbria is expected to generate 0.75 times more return on investment than BCE. However, Cymbria is 1.32 times less risky than BCE. It trades about 0.01 of its potential returns per unit of risk. BCE Inc is currently generating about -0.35 per unit of risk. If you would invest  7,219  in Cymbria on September 27, 2024 and sell it today you would earn a total of  26.00  from holding Cymbria or generate 0.36% return on investment over 90 days.

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

Cymbria  vs.  BCE Inc

Cymbria

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cymbria has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, Cymbria is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

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.

Pair Trading with Cymbria and BCE

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

The idea behind Cymbria and BCE Inc 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.