Correlation Between Bank of America and Columbia Acorn
Can any of the company-specific risk be diversified away by investing in both Bank of America and Columbia Acorn 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 Acorn 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 Acorn Usa, you can compare the effects of market volatilities on Bank of America and Columbia Acorn 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 Acorn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Columbia Acorn.
Diversification Opportunities for Bank of America and Columbia Acorn
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Columbia is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Columbia Acorn Usa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Acorn Usa 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 Acorn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Acorn Usa has no effect on the direction of Bank of America i.e., Bank of America and Columbia Acorn go up and down completely randomly.
Pair Corralation between Bank of America and Columbia Acorn
If you would invest 4,182 in Bank of America on September 1, 2024 and sell it today you would earn a total of 569.00 from holding Bank of America or generate 13.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Bank of America vs. Columbia Acorn Usa
Performance |
| Timeline |
| Bank of America |
| Columbia Acorn Usa |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank of America and Columbia Acorn Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Columbia Acorn
The main advantage of trading using opposite Bank of America and Columbia Acorn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Columbia Acorn 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 Acorn will offset losses from the drop in Columbia Acorn's long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Columbia Acorn vs. Royce Global Financial | Columbia Acorn vs. Financials Ultrasector Profund | Columbia Acorn vs. Mesirow Financial Small | Columbia Acorn vs. Vanguard Financials Index |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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