Correlation Between Service Properties and BCE

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

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

Diversification Opportunities for Service Properties and BCE

0.11

Correlation Coefficient

Service Properties  BCE

Average diversification

The 3 months correlation between Service and BCE is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Service Properties Trust and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc and Service Properties 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 Service Properties Trust 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 Service Properties i.e., Service Properties and BCE go up and down completely randomly.

Pair Corralation between Service Properties and BCE

Considering the 90-day investment horizon Service Properties Trust is expected to generate 2.47 times more return on investment than BCE. However, Service Properties is 2.47 times more volatile than BCE Inc. It trades about 0.05 of its potential returns per unit of risk. BCE Inc is currently generating about 0.02 per unit of risk. If you would invest  256.00  in Service Properties Trust on December 26, 2024 and sell it today you would earn a total of  20.00  from holding Service Properties Trust or generate 7.81% return on investment over 90 days.

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

Service Properties Trust  vs.  BCE Inc

Service Properties Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Service Properties Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Service Properties exhibited solid returns over the last few months and may actually be approaching a breakup point.

BCE Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BCE Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, BCE is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Service Properties and BCE

The main advantage of trading using opposite Service Properties and BCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Service Properties 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 Service Properties Trust 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.