Correlation Between Paradigm and Capital BofA
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By analyzing existing cross correlation between Paradigm SP GSCI and Capital BofA Merrill, you can compare the effects of market volatilities on Paradigm and Capital BofA 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 Paradigm with a short position of Capital BofA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paradigm and Capital BofA.
Diversification Opportunities for Paradigm and Capital BofA
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Paradigm and Capital is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Paradigm SP GSCI and Capital BofA Merrill in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital BofA Merrill and Paradigm 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 Paradigm SP GSCI are associated (or correlated) with Capital BofA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital BofA Merrill has no effect on the direction of Paradigm i.e., Paradigm and Capital BofA go up and down completely randomly.
Pair Corralation between Paradigm and Capital BofA
Assuming the 90 days trading horizon Paradigm SP GSCI is expected to generate 4.42 times more return on investment than Capital BofA. However, Paradigm is 4.42 times more volatile than Capital BofA Merrill. It trades about 0.43 of its potential returns per unit of risk. Capital BofA Merrill is currently generating about -0.01 per unit of risk. If you would invest 1,292 in Paradigm SP GSCI on October 21, 2024 and sell it today you would earn a total of 351.00 from holding Paradigm SP GSCI or generate 27.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Paradigm SP GSCI vs. Capital BofA Merrill
Performance |
| Timeline |
| Paradigm SP GSCI |
| Capital BofA Merrill |
Paradigm and Capital BofA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paradigm and Capital BofA
The main advantage of trading using opposite Paradigm and Capital BofA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paradigm position performs unexpectedly, Capital BofA 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 Capital BofA will offset losses from the drop in Capital BofA's long position.| Paradigm vs. Paradigm SP GSCI | Paradigm vs. CTBC USD Corporate | Paradigm vs. Cathay TIP TAIEX | Paradigm vs. Yuanta Daily SP |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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