Correlation Between BCE and 44107TAV8

Can any of the company-specific risk be diversified away by investing in both BCE and 44107TAV8 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 44107TAV8 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BCE Inc and HOST HOTELS RESORTS, you can compare the effects of market volatilities on BCE and 44107TAV8 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 44107TAV8. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCE and 44107TAV8.

Diversification Opportunities for BCE and 44107TAV8

0.03

Correlation Coefficient

BCE  44107TAV8

Significant diversification

The 3 months correlation between BCE and 44107TAV8 is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and HOST HOTELS RESORTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOST HOTELS RESORTS 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 44107TAV8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOST HOTELS RESORTS has no effect on the direction of BCE i.e., BCE and 44107TAV8 go up and down completely randomly.

Pair Corralation between BCE and 44107TAV8

Considering the 90-day investment horizon BCE Inc is expected to generate 12.14 times more return on investment than 44107TAV8. However, BCE is 12.14 times more volatile than HOST HOTELS RESORTS. It trades about 0.05 of its potential returns per unit of risk. HOST HOTELS RESORTS is currently generating about -0.05 per unit of risk. If you would invest  2,189  in BCE Inc on December 30, 2024 and sell it today you would earn a total of  108.00  from holding BCE Inc or generate 4.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	88.71%
Values	Daily Returns

BCE Inc  vs.  HOST HOTELS RESORTS

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 sound fundamental indicators, BCE is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

HOST HOTELS RESORTS

Risk-Adjusted Performance

Very Weak

Over the last 90 days HOST HOTELS RESORTS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 44107TAV8 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BCE and 44107TAV8

The main advantage of trading using opposite BCE and 44107TAV8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCE position performs unexpectedly, 44107TAV8 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 44107TAV8 will offset losses from the drop in 44107TAV8's long position.

The idea behind BCE Inc and HOST HOTELS RESORTS 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.