Correlation Between BCE and 26442RAD3

Can any of the company-specific risk be diversified away by investing in both BCE and 26442RAD3 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 26442RAD3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BCE Inc and DUKE ENERGY PROGRESS, you can compare the effects of market volatilities on BCE and 26442RAD3 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 26442RAD3. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCE and 26442RAD3.

Diversification Opportunities for BCE and 26442RAD3

0.68

Correlation Coefficient

BCE  26442RAD3

Poor diversification

The 3 months correlation between BCE and 26442RAD3 is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and DUKE ENERGY PROGRESS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DUKE ENERGY PROGRESS 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 26442RAD3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DUKE ENERGY PROGRESS has no effect on the direction of BCE i.e., BCE and 26442RAD3 go up and down completely randomly.

Pair Corralation between BCE and 26442RAD3

Considering the 90-day investment horizon BCE Inc is expected to under-perform the 26442RAD3. In addition to that, BCE is 2.08 times more volatile than DUKE ENERGY PROGRESS. It trades about -0.3 of its total potential returns per unit of risk. DUKE ENERGY PROGRESS is currently generating about -0.03 per unit of volatility. If you would invest  8,408  in DUKE ENERGY PROGRESS on October 25, 2024 and sell it today you would lose (138.00) from holding DUKE ENERGY PROGRESS or give up 1.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	88.33%
Values	Daily Returns

BCE Inc  vs.  DUKE ENERGY PROGRESS

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 inconsistent 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.

DUKE ENERGY PROGRESS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DUKE ENERGY PROGRESS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 26442RAD3 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 26442RAD3

The main advantage of trading using opposite BCE and 26442RAD3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCE position performs unexpectedly, 26442RAD3 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 26442RAD3 will offset losses from the drop in 26442RAD3's long position.

The idea behind BCE Inc and DUKE ENERGY PROGRESS 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.