Correlation Between Patagonia Gold and Bce

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

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

Diversification Opportunities for Patagonia Gold and Bce

0.25

Correlation Coefficient

Patagonia Gold  Bce

Modest diversification

The 3 months correlation between Patagonia and Bce is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Patagonia Gold Corp 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 Patagonia Gold 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 Patagonia Gold 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 Pref has no effect on the direction of Patagonia Gold i.e., Patagonia Gold and Bce go up and down completely randomly.

Pair Corralation between Patagonia Gold and Bce

Assuming the 90 days trading horizon Patagonia Gold Corp is expected to generate 7.46 times more return on investment than Bce. However, Patagonia Gold is 7.46 times more volatile than Bce Inc Pref. It trades about 0.06 of its potential returns per unit of risk. Bce Inc Pref is currently generating about 0.27 per unit of risk. If you would invest  4.00  in Patagonia Gold Corp on October 23, 2024 and sell it today you would earn a total of  0.00  from holding Patagonia Gold Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Patagonia Gold Corp  vs.  Bce Inc Pref

Patagonia Gold Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Patagonia Gold Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Patagonia Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Bce Inc Pref

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bce Inc Pref are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Bce may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Patagonia Gold and Bce

The main advantage of trading using opposite Patagonia Gold and Bce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patagonia Gold 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 Patagonia Gold Corp 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.

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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.