Correlation Between Bce and CHAR Technologies
Can any of the company-specific risk be diversified away by investing in both Bce and CHAR Technologies 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 CHAR Technologies 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 CHAR Technologies, you can compare the effects of market volatilities on Bce and CHAR Technologies 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 CHAR Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bce and CHAR Technologies.
Diversification Opportunities for Bce and CHAR Technologies
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bce and CHAR is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Bce Inc Pref and CHAR Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHAR Technologies 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 CHAR Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHAR Technologies has no effect on the direction of Bce i.e., Bce and CHAR Technologies go up and down completely randomly.
Pair Corralation between Bce and CHAR Technologies
Assuming the 90 days trading horizon Bce Inc Pref is expected to generate 0.12 times more return on investment than CHAR Technologies. However, Bce Inc Pref is 8.14 times less risky than CHAR Technologies. It trades about -0.04 of its potential returns per unit of risk. CHAR Technologies is currently generating about -0.1 per unit of risk. If you would invest 1,631 in Bce Inc Pref on September 25, 2024 and sell it today you would lose (55.00) from holding Bce Inc Pref or give up 3.37% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 99.2% |
Values | Daily Returns |
Bce Inc Pref vs. CHAR Technologies
Performance |
Timeline |
Bce Inc Pref |
CHAR Technologies |
Bce and CHAR Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bce and CHAR Technologies
The main advantage of trading using opposite Bce and CHAR Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bce position performs unexpectedly, CHAR Technologies 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 CHAR Technologies will offset losses from the drop in CHAR Technologies' long position.The idea behind Bce Inc Pref and CHAR 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.CHAR Technologies vs. Environmental Waste International | CHAR Technologies vs. BluMetric Environmental | CHAR Technologies vs. Clear Blue Technologies | CHAR Technologies vs. Eguana Technologies |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
Stocks Directory Find actively traded stocks across global markets | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |