Correlation Between Bank of America and Cambridge Capital
Can any of the company-specific risk be diversified away by investing in both Bank of America and Cambridge Capital 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 Cambridge Capital 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 Cambridge Capital Holdings, you can compare the effects of market volatilities on Bank of America and Cambridge Capital 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 Cambridge Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Cambridge Capital.
Diversification Opportunities for Bank of America and Cambridge Capital
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Cambridge is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Cambridge Capital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambridge Capital 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 Cambridge Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambridge Capital has no effect on the direction of Bank of America i.e., Bank of America and Cambridge Capital go up and down completely randomly.
Pair Corralation between Bank of America and Cambridge Capital
Considering the 90-day investment horizon Bank of America is expected to generate 22.98 times less return on investment than Cambridge Capital. But when comparing it to its historical volatility, Bank of America is 35.14 times less risky than Cambridge Capital. It trades about 0.1 of its potential returns per unit of risk. Cambridge Capital Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Cambridge Capital Holdings on September 2, 2024 and sell it today you would earn a total of 15.00 from holding Cambridge Capital Holdings or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Bank of America vs. Cambridge Capital Holdings
Performance |
| Timeline |
| Bank of America |
| Cambridge Capital |
Bank of America and Cambridge Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Cambridge Capital
The main advantage of trading using opposite Bank of America and Cambridge Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Cambridge Capital 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 Cambridge Capital will offset losses from the drop in Cambridge Capital'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 |
| Cambridge Capital vs. South32 Limited | Cambridge Capital vs. NioCorp Developments Ltd | Cambridge Capital vs. HUMANA INC | Cambridge Capital 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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