Correlation Between BCE and Shenandoah Telecommunicatio

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

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

Diversification Opportunities for BCE and Shenandoah Telecommunicatio

-0.12

Correlation Coefficient

BCE  Shenandoah Telecommunicatio

Good diversification

The 3 months correlation between BCE and Shenandoah is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and Shenandoah Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenandoah Telecommunicatio has no effect on the direction of BCE i.e., BCE and Shenandoah Telecommunicatio go up and down completely randomly.

Pair Corralation between BCE and Shenandoah Telecommunicatio

Considering the 90-day investment horizon BCE is expected to generate 1.56 times less return on investment than Shenandoah Telecommunicatio. But when comparing it to its historical volatility, BCE Inc is 1.49 times less risky than Shenandoah Telecommunicatio. It trades about 0.06 of its potential returns per unit of risk. Shenandoah Telecommunications Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,242  in Shenandoah Telecommunications Co on December 29, 2024 and sell it today you would earn a total of  106.00  from holding Shenandoah Telecommunications Co or generate 8.53% 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.  Shenandoah Telecommunications

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.

Shenandoah Telecommunicatio

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenandoah Telecommunications Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Shenandoah Telecommunicatio may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BCE and Shenandoah Telecommunicatio

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

The idea behind BCE Inc and Shenandoah Telecommunications Co 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.