Correlation Between Bank of America and WillScot Mobile
Can any of the company-specific risk be diversified away by investing in both Bank of America and WillScot Mobile 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 WillScot Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and WillScot Mobile Mini, you can compare the effects of market volatilities on Bank of America and WillScot Mobile 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 WillScot Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and WillScot Mobile.
Diversification Opportunities for Bank of America and WillScot Mobile
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bank and WillScot is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and WillScot Mobile Mini in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WillScot Mobile Mini 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 WillScot Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WillScot Mobile Mini has no effect on the direction of Bank of America i.e., Bank of America and WillScot Mobile go up and down completely randomly.
Pair Corralation between Bank of America and WillScot Mobile
Assuming the 90 days trading horizon Verizon Communications is expected to generate 0.6 times more return on investment than WillScot Mobile. However, Verizon Communications is 1.67 times less risky than WillScot Mobile. It trades about 0.04 of its potential returns per unit of risk. WillScot Mobile Mini is currently generating about -0.01 per unit of risk. If you would invest 3,265 in Verizon Communications on September 1, 2024 and sell it today you would earn a total of 910.00 from holding Verizon Communications or generate 27.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. WillScot Mobile Mini
Performance |
| Timeline |
| Verizon Communications |
| WillScot Mobile Mini |
Bank of America and WillScot Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and WillScot Mobile
The main advantage of trading using opposite Bank of America and WillScot Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, WillScot Mobile 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 WillScot Mobile will offset losses from the drop in WillScot Mobile'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 |
| WillScot Mobile vs. COPLAND ROAD CAPITAL | WillScot Mobile vs. SLR Investment Corp | WillScot Mobile vs. Air Transport Services | WillScot Mobile vs. REGAL ASIAN INVESTMENTS |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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