Correlation Between Comcast Corp and BCE

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

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

Diversification Opportunities for Comcast Corp and BCE

0.78

Correlation Coefficient

Comcast Corp  BCE

Poor diversification

The 3 months correlation between Comcast and BCE is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Comcast Corp and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc and Comcast Corp 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 Comcast 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 Comcast Corp i.e., Comcast Corp and BCE go up and down completely randomly.

Pair Corralation between Comcast Corp and BCE

Assuming the 90 days horizon Comcast Corp is expected to generate 4.02 times more return on investment than BCE. However, Comcast Corp is 4.02 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 0.13 per unit of risk. If you would invest  3,921  in Comcast Corp on August 31, 2024 and sell it today you would earn a total of  335.00  from holding Comcast Corp or generate 8.54% return on investment over 90 days.

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

Comcast Corp  vs.  BCE Inc

Comcast Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Comcast Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat sluggish basic indicators, Comcast Corp may actually be approaching a critical reversion point that can send shares even higher in December 2024.

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 Comcast Corp and BCE

The main advantage of trading using opposite Comcast Corp and BCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comcast Corp 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 Comcast 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.