Correlation Between Citic Telecom and Bank of America
Can any of the company-specific risk be diversified away by investing in both Citic Telecom and Bank of America 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 Citic Telecom and Bank of America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citic Telecom International and Verizon Communications, you can compare the effects of market volatilities on Citic Telecom and Bank of America 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 Citic Telecom with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Telecom and Bank of America.
Diversification Opportunities for Citic Telecom and Bank of America
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Citic and Bank is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Citic Telecom International and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and Citic Telecom 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 Citic Telecom International are associated (or correlated) with Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of Citic Telecom i.e., Citic Telecom and Bank of America go up and down completely randomly.
Pair Corralation between Citic Telecom and Bank of America
Assuming the 90 days trading horizon Citic Telecom International is expected to generate 2.51 times more return on investment than Bank of America. However, Citic Telecom is 2.51 times more volatile than Verizon Communications. It trades about 0.06 of its potential returns per unit of risk. Verizon Communications is currently generating about -0.02 per unit of risk. If you would invest 27.00 in Citic Telecom International on November 27, 2024 and sell it today you would earn a total of 2.00 from holding Citic Telecom International or generate 7.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citic Telecom International vs. Verizon Communications
Performance |
| Timeline |
| Citic Telecom Intern |
| Verizon Communications |
Citic Telecom and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citic Telecom and Bank of America
The main advantage of trading using opposite Citic Telecom and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic Telecom position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.| Citic Telecom vs. Constellation Software | Citic Telecom vs. COVIVIO HOTELS INH | Citic Telecom vs. FORMPIPE SOFTWARE AB | Citic Telecom vs. MELIA HOTELS |
| Bank of America vs. SBM OFFSHORE | Bank of America vs. LG Display Co | Bank of America vs. Data3 Limited | Bank of America vs. USWE SPORTS AB |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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