Correlation Between Bce and Trican Well

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

Diversification Opportunities for Bce and Trican Well

-0.3

Correlation Coefficient

Bce  Trican Well

Very good diversification

The 3 months correlation between Bce and Trican is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Bce Inc Pref and Trican Well Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trican Well Service 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 Trican Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trican Well Service has no effect on the direction of Bce i.e., Bce and Trican Well go up and down completely randomly.

Pair Corralation between Bce and Trican Well

Assuming the 90 days trading horizon Bce is expected to generate 2.78 times less return on investment than Trican Well. But when comparing it to its historical volatility, Bce Inc Pref is 1.51 times less risky than Trican Well. It trades about 0.16 of its potential returns per unit of risk. Trican Well Service is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  476.00  in Trican Well Service on October 9, 2024 and sell it today you would earn a total of  51.00  from holding Trican Well Service or generate 10.71% 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.  Trican Well Service

Bce Inc Pref

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bce Inc Pref has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Trican Well Service

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trican Well Service are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Trican Well displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bce and Trican Well

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

The idea behind Bce Inc Pref and Trican Well Service 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.