Correlation Between BCE and SolarWindow Technologies

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

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

Diversification Opportunities for BCE and SolarWindow Technologies

-0.45

Correlation Coefficient

BCE  SolarWindow Technologies

Very good diversification

The 3 months correlation between BCE and SolarWindow is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and SolarWindow Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolarWindow Technologies 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 SolarWindow Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolarWindow Technologies has no effect on the direction of BCE i.e., BCE and SolarWindow Technologies go up and down completely randomly.

Pair Corralation between BCE and SolarWindow Technologies

Assuming the 90 days horizon BCE is expected to generate 6.91 times less return on investment than SolarWindow Technologies. But when comparing it to its historical volatility, BCE Inc is 29.32 times less risky than SolarWindow Technologies. It trades about 0.13 of its potential returns per unit of risk. SolarWindow Technologies is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  30.00  in SolarWindow Technologies on December 29, 2024 and sell it today you would lose (4.00) from holding SolarWindow Technologies or give up 13.33% of portfolio value over 90 days.

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

BCE Inc  vs.  SolarWindow Technologies

BCE Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BCE Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, BCE is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

SolarWindow Technologies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SolarWindow Technologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, SolarWindow Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BCE and SolarWindow Technologies

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

The idea behind BCE Inc and SolarWindow Technologies 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.