Correlation Between Kinsale Capital and BCE

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

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

Diversification Opportunities for Kinsale Capital and BCE

-0.54

Correlation Coefficient

Kinsale Capital  BCE

Excellent diversification

The 3 months correlation between Kinsale and BCE is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Kinsale Capital Group and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc and Kinsale Capital 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 Kinsale Capital Group 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 Kinsale Capital i.e., Kinsale Capital and BCE go up and down completely randomly.

Pair Corralation between Kinsale Capital and BCE

Given the investment horizon of 90 days Kinsale Capital Group is expected to generate 2.26 times more return on investment than BCE. However, Kinsale Capital is 2.26 times more volatile than BCE Inc. It trades about 0.06 of its potential returns per unit of risk. BCE Inc is currently generating about -0.08 per unit of risk. If you would invest  25,953  in Kinsale Capital Group on September 24, 2024 and sell it today you would earn a total of  20,530  from holding Kinsale Capital Group or generate 79.1% return on investment over 90 days.

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

Kinsale Capital Group  vs.  BCE Inc

Kinsale Capital Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kinsale Capital Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Kinsale Capital is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

BCE Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BCE Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Kinsale Capital and BCE

The main advantage of trading using opposite Kinsale Capital and BCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinsale Capital 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 Kinsale Capital Group 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.