Correlation Between 539830BY4 and BCE

Can any of the company-specific risk be diversified away by investing in both 539830BY4 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 539830BY4 and BCE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LMT 59 15 NOV 63 and BCE Inc, you can compare the effects of market volatilities on 539830BY4 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 539830BY4 with a short position of BCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of 539830BY4 and BCE.

Diversification Opportunities for 539830BY4 and BCE

0.47

Correlation Coefficient

539830BY4  BCE

Very weak diversification

The 3 months correlation between 539830BY4 and BCE is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding LMT 59 15 NOV 63 and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc and 539830BY4 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 LMT 59 15 NOV 63 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 539830BY4 i.e., 539830BY4 and BCE go up and down completely randomly.

Pair Corralation between 539830BY4 and BCE

Assuming the 90 days trading horizon LMT 59 15 NOV 63 is expected to generate 1.36 times more return on investment than BCE. However, 539830BY4 is 1.36 times more volatile than BCE Inc. It trades about 0.31 of its potential returns per unit of risk. BCE Inc is currently generating about -0.22 per unit of risk. If you would invest  10,545  in LMT 59 15 NOV 63 on September 15, 2024 and sell it today you would earn a total of  900.00  from holding LMT 59 15 NOV 63 or generate 8.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.48%
Values	Daily Returns

LMT 59 15 NOV 63  vs.  BCE Inc

LMT 59 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LMT 59 15 NOV 63 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 539830BY4 is not utilizing all of its potentials. The latest stock price disturbance, 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 inconsistent 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.

Pair Trading with 539830BY4 and BCE

The main advantage of trading using opposite 539830BY4 and BCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 539830BY4 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 LMT 59 15 NOV 63 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.