Correlation Between BCE and Air Lease
Can any of the company-specific risk be diversified away by investing in both BCE and Air Lease 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 Air Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BCE Inc and Air Lease, you can compare the effects of market volatilities on BCE and Air Lease 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 Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCE and Air Lease.
Diversification Opportunities for BCE and Air Lease
Pay attention - limited upside
The 3 months correlation between BCE and Air is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease 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 are associated (or correlated) with Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of BCE i.e., BCE and Air Lease go up and down completely randomly.
Pair Corralation between BCE and Air Lease
Considering the 90-day investment horizon BCE Inc is expected to under-perform the Air Lease. But the stock apears to be less risky and, when comparing its historical volatility, BCE Inc is 1.14 times less risky than Air Lease. The stock trades about -0.56 of its potential returns per unit of risk. The Air Lease is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest 5,193 in Air Lease on September 26, 2024 and sell it today you would lose (332.00) from holding Air Lease or give up 6.39% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
BCE Inc vs. Air Lease
Performance |
Timeline |
BCE Inc |
Air Lease |
BCE and Air Lease Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BCE and Air Lease
The main advantage of trading using opposite BCE and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCE position performs unexpectedly, Air Lease 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 Air Lease will offset losses from the drop in Air Lease's long position.BCE vs. Grab Holdings | BCE vs. Cadence Design Systems | BCE vs. Aquagold International | BCE vs. Morningstar Unconstrained Allocation |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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