Correlation Between Bank of America and CONAGRA FOODS
Can any of the company-specific risk be diversified away by investing in both Bank of America and CONAGRA FOODS 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 CONAGRA FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and CONAGRA FOODS, you can compare the effects of market volatilities on Bank of America and CONAGRA FOODS 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 CONAGRA FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and CONAGRA FOODS.
Diversification Opportunities for Bank of America and CONAGRA FOODS
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and CONAGRA is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and CONAGRA FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONAGRA FOODS 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 CONAGRA FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONAGRA FOODS has no effect on the direction of Bank of America i.e., Bank of America and CONAGRA FOODS go up and down completely randomly.
Pair Corralation between Bank of America and CONAGRA FOODS
Assuming the 90 days trading horizon Verizon Communications is expected to generate 0.94 times more return on investment than CONAGRA FOODS. However, Verizon Communications is 1.06 times less risky than CONAGRA FOODS. It trades about 0.09 of its potential returns per unit of risk. CONAGRA FOODS is currently generating about 0.0 per unit of risk. If you would invest 3,643 in Verizon Communications on September 1, 2024 and sell it today you would earn a total of 532.00 from holding Verizon Communications or generate 14.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. CONAGRA FOODS
Performance |
| Timeline |
| Verizon Communications |
| CONAGRA FOODS |
Bank of America and CONAGRA FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and CONAGRA FOODS
The main advantage of trading using opposite Bank of America and CONAGRA FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, CONAGRA FOODS 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 CONAGRA FOODS will offset losses from the drop in CONAGRA FOODS's long position.| Bank of America vs. Regions Financial | Bank of America vs. Shin Etsu Chemical Co | Bank of America vs. Sumitomo Chemical | Bank of America vs. CHEMICAL INDUSTRIES |
| CONAGRA FOODS vs. SIVERS SEMICONDUCTORS AB | CONAGRA FOODS vs. Darden Restaurants | CONAGRA FOODS vs. Reliance Steel Aluminum | CONAGRA FOODS vs. Q2M Managementberatung AG |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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