Correlation Between Bce and Northstar Clean

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

By analyzing existing cross correlation between Bce Inc Pref and Northstar Clean Technologies, you can compare the effects of market volatilities on Bce and Northstar Clean 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 Northstar Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bce and Northstar Clean.

Diversification Opportunities for Bce and Northstar Clean

-0.33

Correlation Coefficient

Bce  Northstar Clean

Very good diversification

The 3 months correlation between Bce and Northstar is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Bce Inc Pref and Northstar Clean Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northstar Clean Tech 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 Pref are associated (or correlated) with Northstar Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northstar Clean Tech has no effect on the direction of Bce i.e., Bce and Northstar Clean go up and down completely randomly.

Pair Corralation between Bce and Northstar Clean

Assuming the 90 days trading horizon Bce Inc Pref is expected to generate 0.22 times more return on investment than Northstar Clean. However, Bce Inc Pref is 4.58 times less risky than Northstar Clean. It trades about 0.11 of its potential returns per unit of risk. Northstar Clean Technologies is currently generating about -0.04 per unit of risk. If you would invest  1,599  in Bce Inc Pref on December 29, 2024 and sell it today you would earn a total of  76.00  from holding Bce Inc Pref or generate 4.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Bce Inc Pref  vs.  Northstar Clean Technologies

Bce Inc Pref

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bce Inc Pref are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Bce is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Northstar Clean Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Northstar Clean Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Bce and Northstar Clean

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

The idea behind Bce Inc Pref and Northstar Clean Technologies 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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.