Correlation Between Software Acquisition and BCE

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

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

Diversification Opportunities for Software Acquisition and BCE

0.05

Correlation Coefficient

Software Acquisition  BCE

Significant diversification

The 3 months correlation between Software and BCE is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Software Acquisition Group and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc and Software Acquisition 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 Software Acquisition 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 Software Acquisition i.e., Software Acquisition and BCE go up and down completely randomly.

Pair Corralation between Software Acquisition and BCE

Given the investment horizon of 90 days Software Acquisition is expected to generate 3.05 times less return on investment than BCE. In addition to that, Software Acquisition is 3.01 times more volatile than BCE Inc. It trades about 0.01 of its total potential returns per unit of risk. BCE Inc is currently generating about 0.07 per unit of volatility. If you would invest  2,245  in BCE Inc on December 19, 2024 and sell it today you would earn a total of  133.00  from holding BCE Inc or generate 5.92% return on investment over 90 days.

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

Software Acquisition Group  vs.  BCE Inc

Software Acquisition

Risk-Adjusted Performance

Very Weak

Over the last 90 days Software Acquisition Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Software Acquisition is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

BCE Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BCE Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent fundamental indicators, BCE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Software Acquisition and BCE

The main advantage of trading using opposite Software Acquisition and BCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Software Acquisition 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 Software Acquisition 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.