Correlation Between Capital BofA and Cathay Taiwan
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By analyzing existing cross correlation between Capital BofA Merrill and Cathay Taiwan 5G, you can compare the effects of market volatilities on Capital BofA and Cathay Taiwan 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 Capital BofA with a short position of Cathay Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital BofA and Cathay Taiwan.
Diversification Opportunities for Capital BofA and Cathay Taiwan
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Capital and Cathay is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Capital BofA Merrill and Cathay Taiwan 5G in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Taiwan 5G and Capital BofA 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 Capital BofA Merrill are associated (or correlated) with Cathay Taiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Taiwan 5G has no effect on the direction of Capital BofA i.e., Capital BofA and Cathay Taiwan go up and down completely randomly.
Pair Corralation between Capital BofA and Cathay Taiwan
Assuming the 90 days trading horizon Capital BofA is expected to generate 3.55 times less return on investment than Cathay Taiwan. But when comparing it to its historical volatility, Capital BofA Merrill is 3.21 times less risky than Cathay Taiwan. It trades about 0.11 of its potential returns per unit of risk. Cathay Taiwan 5G is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,618 in Cathay Taiwan 5G on September 5, 2024 and sell it today you would earn a total of 822.00 from holding Cathay Taiwan 5G or generate 50.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.53% |
| Values | Daily Returns |
Capital BofA Merrill vs. Cathay Taiwan 5G
Performance |
| Timeline |
| Capital BofA Merrill |
| Cathay Taiwan 5G |
Capital BofA and Cathay Taiwan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital BofA and Cathay Taiwan
The main advantage of trading using opposite Capital BofA and Cathay Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital BofA position performs unexpectedly, Cathay Taiwan 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 Cathay Taiwan will offset losses from the drop in Cathay Taiwan's long position.| Capital BofA vs. Ruentex Development Co | Capital BofA vs. Symtek Automation Asia | Capital BofA vs. CTCI Corp | Capital BofA vs. Information Technology Total |
| Cathay Taiwan vs. Ruentex Development Co | Cathay Taiwan vs. Symtek Automation Asia | Cathay Taiwan vs. CTCI Corp | Cathay Taiwan vs. Information Technology Total |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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