Correlation Between Bank of America and STRAYER EDUCATION
Can any of the company-specific risk be diversified away by investing in both Bank of America and STRAYER EDUCATION 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 STRAYER EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and STRAYER EDUCATION, you can compare the effects of market volatilities on Bank of America and STRAYER EDUCATION 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 STRAYER EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and STRAYER EDUCATION.
Diversification Opportunities for Bank of America and STRAYER EDUCATION
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and STRAYER is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and STRAYER EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRAYER EDUCATION 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 STRAYER EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRAYER EDUCATION has no effect on the direction of Bank of America i.e., Bank of America and STRAYER EDUCATION go up and down completely randomly.
Pair Corralation between Bank of America and STRAYER EDUCATION
Assuming the 90 days trading horizon Verizon Communications is expected to under-perform the STRAYER EDUCATION. But the stock apears to be less risky and, when comparing its historical volatility, Verizon Communications is 1.07 times less risky than STRAYER EDUCATION. The stock trades about -0.09 of its potential returns per unit of risk. The STRAYER EDUCATION is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 8,943 in STRAYER EDUCATION on September 19, 2024 and sell it today you would earn a total of 657.00 from holding STRAYER EDUCATION or generate 7.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. STRAYER EDUCATION
Performance |
| Timeline |
| Verizon Communications |
| STRAYER EDUCATION |
Bank of America and STRAYER EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and STRAYER EDUCATION
The main advantage of trading using opposite Bank of America and STRAYER EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, STRAYER EDUCATION 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 STRAYER EDUCATION will offset losses from the drop in STRAYER EDUCATION's long position.| Bank of America vs. Apple Inc | Bank of America vs. Apple Inc | Bank of America vs. Apple Inc | Bank of America vs. Apple Inc |
| STRAYER EDUCATION vs. Apple Inc | STRAYER EDUCATION vs. Apple Inc | STRAYER EDUCATION vs. Apple Inc | STRAYER EDUCATION vs. Apple Inc |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |