Correlation Between BCE and Prestige Wealth

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

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

Diversification Opportunities for BCE and Prestige Wealth

-0.11

Correlation Coefficient

BCE  Prestige Wealth

Good diversification

The 3 months correlation between BCE and Prestige is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and Prestige Wealth Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prestige Wealth Ordinary 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 Prestige Wealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prestige Wealth Ordinary has no effect on the direction of BCE i.e., BCE and Prestige Wealth go up and down completely randomly.

Pair Corralation between BCE and Prestige Wealth

Considering the 90-day investment horizon BCE Inc is expected to under-perform the Prestige Wealth. But the stock apears to be less risky and, when comparing its historical volatility, BCE Inc is 7.87 times less risky than Prestige Wealth. The stock trades about -0.11 of its potential returns per unit of risk. The Prestige Wealth Ordinary is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  106.00  in Prestige Wealth Ordinary on December 3, 2024 and sell it today you would lose (45.92) from holding Prestige Wealth Ordinary or give up 43.32% of portfolio value over 90 days.

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

BCE Inc  vs.  Prestige Wealth Ordinary

BCE Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days BCE Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Prestige Wealth Ordinary

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prestige Wealth Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Prestige Wealth is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BCE and Prestige Wealth

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

The idea behind BCE Inc and Prestige Wealth Ordinary 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 Stocks Directory module to find actively traded stocks across global markets.