Correlation Between BCE and CAMDEN

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

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

Diversification Opportunities for BCE and CAMDEN

-0.21

Correlation Coefficient

BCE  CAMDEN

Very good diversification

The 3 months correlation between BCE and CAMDEN is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and CAMDEN PPTY TR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAMDEN PPTY TR 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 CAMDEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAMDEN PPTY TR has no effect on the direction of BCE i.e., BCE and CAMDEN go up and down completely randomly.

Pair Corralation between BCE and CAMDEN

Considering the 90-day investment horizon BCE Inc is expected to under-perform the CAMDEN. In addition to that, BCE is 3.68 times more volatile than CAMDEN PPTY TR. It trades about -0.32 of its total potential returns per unit of risk. CAMDEN PPTY TR is currently generating about -0.28 per unit of volatility. If you would invest  9,818  in CAMDEN PPTY TR on October 6, 2024 and sell it today you would lose (203.00) from holding CAMDEN PPTY TR or give up 2.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

BCE Inc  vs.  CAMDEN PPTY TR

BCE Inc

Risk-Adjusted Performance

0 of 100

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 uncertain performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

CAMDEN PPTY TR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAMDEN PPTY TR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CAMDEN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BCE and CAMDEN

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

The idea behind BCE Inc and CAMDEN PPTY TR 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.