Correlation Between Blackline Safety and BCE

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

By analyzing existing cross correlation between Blackline Safety Corp and BCE Inc, you can compare the effects of market volatilities on Blackline Safety and BCE 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 Blackline Safety with a short position of BCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackline Safety and BCE.

Diversification Opportunities for Blackline Safety and BCE

0.44

Correlation Coefficient

Blackline Safety  BCE

Very weak diversification

The 3 months correlation between Blackline and BCE is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Blackline Safety Corp and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc and Blackline Safety 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 Blackline Safety Corp are associated (or correlated) with BCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCE Inc has no effect on the direction of Blackline Safety i.e., Blackline Safety and BCE go up and down completely randomly.

Pair Corralation between Blackline Safety and BCE

Assuming the 90 days horizon Blackline Safety Corp is expected to generate 4.38 times more return on investment than BCE. However, Blackline Safety is 4.38 times more volatile than BCE Inc. It trades about 0.1 of its potential returns per unit of risk. BCE Inc is currently generating about 0.04 per unit of risk. If you would invest  280.00  in Blackline Safety Corp on September 2, 2024 and sell it today you would earn a total of  178.00  from holding Blackline Safety Corp or generate 63.57% return on investment over 90 days.

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

Blackline Safety Corp  vs.  BCE Inc

Blackline Safety Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blackline Safety Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Blackline Safety reported solid returns over the last few months and may actually be approaching a breakup point.

BCE Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BCE Inc are ranked lower than 9 (%) 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Blackline Safety and BCE

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

The idea behind Blackline Safety Corp and BCE Inc 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.