Correlation Between BCE and Millicom International

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

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

Diversification Opportunities for BCE and Millicom International

0.85

Correlation Coefficient

BCE  Millicom International

Very poor diversification

The 3 months correlation between BCE and Millicom is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and Millicom International Cellula in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millicom International and BCE 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 BCE Inc are associated (or correlated) with Millicom International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millicom International has no effect on the direction of BCE i.e., BCE and Millicom International go up and down completely randomly.

Pair Corralation between BCE and Millicom International

Considering the 90-day investment horizon BCE is expected to generate 1.85 times less return on investment than Millicom International. But when comparing it to its historical volatility, BCE Inc is 1.1 times less risky than Millicom International. It trades about 0.12 of its potential returns per unit of risk. Millicom International Cellular is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  3,331  in Millicom International Cellular on May 6, 2025 and sell it today you would earn a total of  704.00  from holding Millicom International Cellular or generate 21.13% return on investment over 90 days.

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

BCE Inc  vs.  Millicom International Cellula

BCE Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BCE Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, BCE may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Millicom International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Millicom International Cellular are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Millicom International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BCE and Millicom International

The main advantage of trading using opposite BCE and Millicom International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCE position performs unexpectedly, Millicom International 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 Millicom International will offset losses from the drop in Millicom International's long position.

The idea behind BCE Inc and Millicom International Cellular 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.