Correlation Between BCE and Corporacion America

Can any of the company-specific risk be diversified away by investing in both BCE and Corporacion America 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 Corporacion America into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BCE Inc and Corporacion America Airports, you can compare the effects of market volatilities on BCE and Corporacion America 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 Corporacion America. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCE and Corporacion America.

Diversification Opportunities for BCE and Corporacion America

-0.23

Correlation Coefficient

BCE  Corporacion America

Very good diversification

The 3 months correlation between BCE and Corporacion is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and Corporacion America Airports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporacion America 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 Corporacion America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporacion America has no effect on the direction of BCE i.e., BCE and Corporacion America go up and down completely randomly.

Pair Corralation between BCE and Corporacion America

Considering the 90-day investment horizon BCE Inc is expected to generate 0.69 times more return on investment than Corporacion America. However, BCE Inc is 1.45 times less risky than Corporacion America. It trades about 0.06 of its potential returns per unit of risk. Corporacion America Airports is currently generating about 0.01 per unit of risk. If you would invest  2,189  in BCE Inc on December 29, 2024 and sell it today you would earn a total of  127.00  from holding BCE Inc or generate 5.8% return on investment over 90 days.

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

BCE Inc  vs.  Corporacion America Airports

BCE Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BCE Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, BCE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Corporacion America

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Corporacion America Airports are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Corporacion America is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with BCE and Corporacion America

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

The idea behind BCE Inc and Corporacion America Airports 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.