Correlation Between Bank of America and Going Public
Can any of the company-specific risk be diversified away by investing in both Bank of America and Going Public 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 Going Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and Going Public Media, you can compare the effects of market volatilities on Bank of America and Going Public 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 Going Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Going Public.
Diversification Opportunities for Bank of America and Going Public
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and Going is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Going Public Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Going Public Media 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 Going Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Going Public Media has no effect on the direction of Bank of America i.e., Bank of America and Going Public go up and down completely randomly.
Pair Corralation between Bank of America and Going Public
Assuming the 90 days trading horizon Verizon Communications is expected to generate 0.58 times more return on investment than Going Public. However, Verizon Communications is 1.72 times less risky than Going Public. It trades about 0.03 of its potential returns per unit of risk. Going Public Media is currently generating about -0.03 per unit of risk. If you would invest 3,390 in Verizon Communications on October 7, 2024 and sell it today you would earn a total of 547.00 from holding Verizon Communications or generate 16.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Verizon Communications vs. Going Public Media
Performance |
| Timeline |
| Verizon Communications |
| Going Public Media |
Bank of America and Going Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Going Public
The main advantage of trading using opposite Bank of America and Going Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Going Public 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 Going Public will offset losses from the drop in Going Public's long position.| Bank of America vs. Cogent Communications Holdings | Bank of America vs. AM EAGLE OUTFITTERS | Bank of America vs. NORTHEAST UTILITIES | Bank of America vs. Entravision Communications |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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