Correlation Between Valens and BCE

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

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

Diversification Opportunities for Valens and BCE

0.22

Correlation Coefficient

Valens  BCE

Modest diversification

The 3 months correlation between Valens and BCE is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Valens and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc and Valens 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 Valens 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 Valens i.e., Valens and BCE go up and down completely randomly.

Pair Corralation between Valens and BCE

Considering the 90-day investment horizon Valens is expected to generate 4.82 times more return on investment than BCE. However, Valens is 4.82 times more volatile than BCE Inc. It trades about 0.08 of its potential returns per unit of risk. BCE Inc is currently generating about -0.57 per unit of risk. If you would invest  180.00  in Valens on September 25, 2024 and sell it today you would earn a total of  12.00  from holding Valens or generate 6.67% return on investment over 90 days.

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

Valens  vs.  BCE Inc

Valens

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valens has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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

Pair Trading with Valens and BCE

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