Correlation Between B Communications and Federal Signal
Can any of the company-specific risk be diversified away by investing in both B Communications and Federal Signal 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 B Communications and Federal Signal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between B Communications and Federal Signal, you can compare the effects of market volatilities on B Communications and Federal Signal 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 B Communications with a short position of Federal Signal. Check out your portfolio center. Please also check ongoing floating volatility patterns of B Communications and Federal Signal.
Diversification Opportunities for B Communications and Federal Signal
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BCOMF and Federal is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding B Communications and Federal Signal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Signal and B Communications 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 B Communications are associated (or correlated) with Federal Signal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Signal has no effect on the direction of B Communications i.e., B Communications and Federal Signal go up and down completely randomly.
Pair Corralation between B Communications and Federal Signal
Assuming the 90 days horizon B Communications is expected to generate 0.65 times more return on investment than Federal Signal. However, B Communications is 1.54 times less risky than Federal Signal. It trades about 0.19 of its potential returns per unit of risk. Federal Signal is currently generating about -0.1 per unit of risk. If you would invest 669.00 in B Communications on September 10, 2025 and sell it today you would earn a total of 106.00 from holding B Communications or generate 15.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
B Communications vs. Federal Signal
Performance |
| Timeline |
| B Communications |
| Federal Signal |
B Communications and Federal Signal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B Communications and Federal Signal
The main advantage of trading using opposite B Communications and Federal Signal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B Communications position performs unexpectedly, Federal Signal 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 Federal Signal will offset losses from the drop in Federal Signal's long position.| B Communications vs. NorthPoint Communications Group | B Communications vs. Asia Global Crossing | B Communications vs. Rediff India | B Communications vs. Celexpress |
| Federal Signal vs. Zurn Elkay Water | Federal Signal vs. ESAB Corp | Federal Signal vs. Moog Inc | Federal Signal vs. Toro Co |
Check out your portfolio center.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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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