Correlation Between Mativ Holdings and BCE

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

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

Diversification Opportunities for Mativ Holdings and BCE

-0.8

Correlation Coefficient

Mativ Holdings  BCE

Pay attention - limited upside

The 3 months correlation between Mativ and BCE is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Mativ Holdings and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc and Mativ Holdings 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 Mativ Holdings 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 Mativ Holdings i.e., Mativ Holdings and BCE go up and down completely randomly.

Pair Corralation between Mativ Holdings and BCE

Given the investment horizon of 90 days Mativ Holdings is expected to under-perform the BCE. In addition to that, Mativ Holdings is 10.17 times more volatile than BCE Inc. It trades about -0.05 of its total potential returns per unit of risk. BCE Inc is currently generating about 0.13 per unit of volatility. If you would invest  1,010  in BCE Inc on October 8, 2024 and sell it today you would earn a total of  90.00  from holding BCE Inc or generate 8.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.47%
Values	Daily Returns

Mativ Holdings  vs.  BCE Inc

Mativ Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mativ Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

BCE Inc

Risk-Adjusted Performance

10 of 100

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mativ Holdings and BCE

The main advantage of trading using opposite Mativ Holdings and BCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mativ Holdings 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 Mativ Holdings 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.