Correlation Between Bce and Descartes Systems

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

Diversification Opportunities for Bce and Descartes Systems

0.07

Correlation Coefficient

Bce  Descartes Systems

Significant diversification

The 3 months correlation between Bce and Descartes is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Bce Inc Pref and Descartes Systems Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Descartes Systems 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 Descartes Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Descartes Systems has no effect on the direction of Bce i.e., Bce and Descartes Systems go up and down completely randomly.

Pair Corralation between Bce and Descartes Systems

Assuming the 90 days trading horizon Bce Inc Pref is expected to generate 0.46 times more return on investment than Descartes Systems. However, Bce Inc Pref is 2.15 times less risky than Descartes Systems. It trades about 0.13 of its potential returns per unit of risk. Descartes Systems Group is currently generating about -0.12 per unit of risk. If you would invest  1,600  in Bce Inc Pref on December 24, 2024 and sell it today you would earn a total of  106.00  from holding Bce Inc Pref or generate 6.62% return on investment over 90 days.

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

Bce Inc Pref  vs.  Descartes Systems Group

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 10 (%) 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.

Descartes Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Descartes Systems Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Bce and Descartes Systems

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

The idea behind Bce Inc Pref and Descartes Systems Group 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.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.