Correlation Between Bank of America and Close Brothers
Can any of the company-specific risk be diversified away by investing in both Bank of America and Close Brothers 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 Close Brothers 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 Close Brothers Group, you can compare the effects of market volatilities on Bank of America and Close Brothers 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 Close Brothers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Close Brothers.
Diversification Opportunities for Bank of America and Close Brothers
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Close is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Close Brothers Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Close Brothers Group 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 Close Brothers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Close Brothers Group has no effect on the direction of Bank of America i.e., Bank of America and Close Brothers go up and down completely randomly.
Pair Corralation between Bank of America and Close Brothers
Considering the 90-day investment horizon Bank of America is expected to generate 0.33 times more return on investment than Close Brothers. However, Bank of America is 3.06 times less risky than Close Brothers. It trades about 0.16 of its potential returns per unit of risk. Close Brothers Group is currently generating about -0.23 per unit of risk. If you would invest 4,044 in Bank of America on September 2, 2024 and sell it today you would earn a total of 707.00 from holding Bank of America or generate 17.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Close Brothers Group
Performance |
| Timeline |
| Bank of America |
| Close Brothers Group |
Bank of America and Close Brothers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Close Brothers
The main advantage of trading using opposite Bank of America and Close Brothers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Close Brothers 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 Close Brothers will offset losses from the drop in Close Brothers' 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 |
| Close Brothers vs. Morgan Stanley | Close Brothers vs. Goldman Sachs Group | Close Brothers vs. HUMANA INC | Close Brothers vs. SCOR PK |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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