Correlation Between Bce and Baru Gold

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

Diversification Opportunities for Bce and Baru Gold

-0.04

Correlation Coefficient

Bce  Baru Gold

Good diversification

The 3 months correlation between Bce and Baru is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Bce Inc Pref and Baru Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baru Gold Corp 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 Baru Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baru Gold Corp has no effect on the direction of Bce i.e., Bce and Baru Gold go up and down completely randomly.

Pair Corralation between Bce and Baru Gold

Assuming the 90 days trading horizon Bce Inc Pref is expected to generate 0.33 times more return on investment than Baru Gold. However, Bce Inc Pref is 3.05 times less risky than Baru Gold. It trades about 0.31 of its potential returns per unit of risk. Baru Gold Corp is currently generating about -0.24 per unit of risk. If you would invest  1,600  in Bce Inc Pref on October 22, 2024 and sell it today you would earn a total of  100.00  from holding Bce Inc Pref or generate 6.25% return on investment over 90 days.

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

Bce Inc Pref  vs.  Baru Gold Corp

Bce Inc Pref

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bce Inc Pref are ranked lower than 3 (%) 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.

Baru Gold Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Baru Gold Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Baru Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bce and Baru Gold

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

The idea behind Bce Inc Pref and Baru Gold Corp 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.