Correlation Between Diamond Estates and Bce

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

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

Diversification Opportunities for Diamond Estates and Bce

-0.34

Correlation Coefficient

Diamond Estates  Bce

Very good diversification

The 3 months correlation between Diamond and Bce is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Estates Wines and Bce Inc Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bce Inc Pref and Diamond Estates 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 Diamond Estates Wines 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 Pref has no effect on the direction of Diamond Estates i.e., Diamond Estates and Bce go up and down completely randomly.

Pair Corralation between Diamond Estates and Bce

Assuming the 90 days horizon Diamond Estates Wines is expected to under-perform the Bce. In addition to that, Diamond Estates is 3.93 times more volatile than Bce Inc Pref. It trades about -0.06 of its total potential returns per unit of risk. Bce Inc Pref is currently generating about 0.2 per unit of volatility. If you would invest  1,512  in Bce Inc Pref on December 20, 2024 and sell it today you would earn a total of  168.00  from holding Bce Inc Pref or generate 11.11% return on investment over 90 days.

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

Diamond Estates Wines  vs.  Bce Inc Pref

Diamond Estates Wines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Diamond Estates Wines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Bce Inc Pref

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bce Inc Pref are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Bce may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Diamond Estates and Bce

The main advantage of trading using opposite Diamond Estates and Bce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Estates 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 Diamond Estates Wines and Bce Inc Pref 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.

Check out your portfolio center.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.