Correlation Between Bank of America and Big Yellow
Can any of the company-specific risk be diversified away by investing in both Bank of America and Big Yellow 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 Bank of America and Big Yellow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and Big Yellow Group, you can compare the effects of market volatilities on Bank of America and Big Yellow 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 Bank of America with a short position of Big Yellow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Big Yellow.
Diversification Opportunities for Bank of America and Big Yellow
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Big is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Big Yellow Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Yellow Group and Bank of America 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 Verizon Communications are associated (or correlated) with Big Yellow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Yellow Group has no effect on the direction of Bank of America i.e., Bank of America and Big Yellow go up and down completely randomly.
Pair Corralation between Bank of America and Big Yellow
Assuming the 90 days trading horizon Verizon Communications is expected to under-perform the Big Yellow. In addition to that, Bank of America is 1.29 times more volatile than Big Yellow Group. It trades about -0.12 of its total potential returns per unit of risk. Big Yellow Group is currently generating about 0.17 per unit of volatility. If you would invest 2,840 in Big Yellow Group on October 22, 2024 and sell it today you would earn a total of 174.00 from holding Big Yellow Group or generate 6.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. Big Yellow Group
Performance |
| Timeline |
| Verizon Communications |
| Big Yellow Group |
Bank of America and Big Yellow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Big Yellow
The main advantage of trading using opposite Bank of America and Big Yellow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Big Yellow 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 Big Yellow will offset losses from the drop in Big Yellow's long position.| Bank of America vs. AEON METALS LTD | Bank of America vs. DAIDO METAL TD | Bank of America vs. Fortescue Metals Group | Bank of America vs. THAI BEVERAGE |
| Big Yellow vs. Agilent Technologies | Big Yellow vs. Liberty Broadband | Big Yellow vs. GLG LIFE TECH | Big Yellow vs. QUEEN S ROAD |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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