Correlation Between Old Republic and BCE

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

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

Diversification Opportunities for Old Republic and BCE

-0.58

Correlation Coefficient

Old Republic  BCE

Excellent diversification

The 3 months correlation between Old and BCE is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc and Old Republic 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 Old Republic International 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 Old Republic i.e., Old Republic and BCE go up and down completely randomly.

Pair Corralation between Old Republic and BCE

Considering the 90-day investment horizon Old Republic International is expected to generate 0.99 times more return on investment than BCE. However, Old Republic International is 1.01 times less risky than BCE. It trades about -0.14 of its potential returns per unit of risk. BCE Inc is currently generating about -0.32 per unit of risk. If you would invest  3,586  in Old Republic International on October 6, 2024 and sell it today you would lose (148.00) from holding Old Republic International or give up 4.13% of portfolio value over 90 days.

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

Old Republic International  vs.  BCE Inc

Old Republic Interna

Risk-Adjusted Performance

6 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Old Republic International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Old Republic is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

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 uncertain performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Old Republic and BCE

The main advantage of trading using opposite Old Republic and BCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Republic 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 Old Republic International 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.