Correlation Between Bank of America and Columbia
Can any of the company-specific risk be diversified away by investing in both Bank of America and Columbia 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 Columbia 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 Columbia Government Mortgage, you can compare the effects of market volatilities on Bank of America and Columbia 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 Columbia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Columbia.
Diversification Opportunities for Bank of America and Columbia
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bank and Columbia is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Columbia Government Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Government 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 Columbia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Government has no effect on the direction of Bank of America i.e., Bank of America and Columbia go up and down completely randomly.
Pair Corralation between Bank of America and Columbia
Considering the 90-day investment horizon Bank of America is expected to generate 2.75 times more return on investment than Columbia. However, Bank of America is 2.75 times more volatile than Columbia Government Mortgage. It trades about 0.14 of its potential returns per unit of risk. Columbia Government Mortgage is currently generating about 0.22 per unit of risk. If you would invest 4,621 in Bank of America on November 9, 2024 and sell it today you would earn a total of 153.00 from holding Bank of America or generate 3.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Columbia Government Mortgage
Performance |
| Timeline |
| Bank of America |
| Columbia Government |
Bank of America and Columbia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Columbia
The main advantage of trading using opposite Bank of America and Columbia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Columbia 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 Columbia will offset losses from the drop in Columbia's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
| Columbia vs. Gmo High Yield | Columbia vs. Litman Gregory Masters | Columbia vs. Pace High Yield | Columbia vs. Intal High Relative |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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