Correlation Between Bce and Falcon Energy

Can any of the company-specific risk be diversified away by investing in both Bce and Falcon Energy 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 Falcon Energy 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 Falcon Energy Materials, you can compare the effects of market volatilities on Bce and Falcon Energy 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 Falcon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bce and Falcon Energy.

Diversification Opportunities for Bce and Falcon Energy

0.18

Correlation Coefficient

Bce  Falcon Energy

Average diversification

The 3 months correlation between Bce and Falcon is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Bce Inc Pref and Falcon Energy Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Energy Materials 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 Falcon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Energy Materials has no effect on the direction of Bce i.e., Bce and Falcon Energy go up and down completely randomly.

Pair Corralation between Bce and Falcon Energy

Assuming the 90 days trading horizon Bce Inc Pref is expected to generate 0.13 times more return on investment than Falcon Energy. However, Bce Inc Pref is 7.53 times less risky than Falcon Energy. It trades about 0.16 of its potential returns per unit of risk. Falcon Energy Materials is currently generating about -0.06 per unit of risk. If you would invest  1,575  in Bce Inc Pref on December 21, 2024 and sell it today you would earn a total of  100.00  from holding Bce Inc Pref or generate 6.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Bce Inc Pref  vs.  Falcon Energy Materials

Bce Inc Pref

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bce Inc Pref are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal technical and fundamental indicators, Bce may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Falcon Energy Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Falcon Energy Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Bce and Falcon Energy

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

The idea behind Bce Inc Pref and Falcon Energy Materials 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.