Correlation Between Bank of America and REDSUN PROPERTIES
Can any of the company-specific risk be diversified away by investing in both Bank of America and REDSUN PROPERTIES 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 REDSUN PROPERTIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and REDSUN PROPERTIES GROUP, you can compare the effects of market volatilities on Bank of America and REDSUN PROPERTIES 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 REDSUN PROPERTIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and REDSUN PROPERTIES.
Diversification Opportunities for Bank of America and REDSUN PROPERTIES
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and REDSUN is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and REDSUN PROPERTIES GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REDSUN PROPERTIES 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 Bank of America are associated (or correlated) with REDSUN PROPERTIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REDSUN PROPERTIES has no effect on the direction of Bank of America i.e., Bank of America and REDSUN PROPERTIES go up and down completely randomly.
Pair Corralation between Bank of America and REDSUN PROPERTIES
Considering the 90-day investment horizon Bank of America is expected to generate 15.58 times less return on investment than REDSUN PROPERTIES. But when comparing it to its historical volatility, Bank of America is 21.7 times less risky than REDSUN PROPERTIES. It trades about 0.13 of its potential returns per unit of risk. REDSUN PROPERTIES GROUP is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1.00 in REDSUN PROPERTIES GROUP on August 31, 2024 and sell it today you would lose (0.75) from holding REDSUN PROPERTIES GROUP or give up 75.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.81% |
| Values | Daily Returns |
Bank of America vs. REDSUN PROPERTIES GROUP
Performance |
| Timeline |
| Bank of America |
| REDSUN PROPERTIES |
Bank of America and REDSUN PROPERTIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and REDSUN PROPERTIES
The main advantage of trading using opposite Bank of America and REDSUN PROPERTIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, REDSUN PROPERTIES 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 REDSUN PROPERTIES will offset losses from the drop in REDSUN PROPERTIES's long position.| Bank of America vs. RLJ Lodging Trust | Bank of America vs. Aquagold International | Bank of America vs. Stepstone Group | Bank of America vs. Morningstar Unconstrained Allocation |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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