Correlation Between Bank of America and Cross Country
Can any of the company-specific risk be diversified away by investing in both Bank of America and Cross Country 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 Cross Country 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 Cross Country Healthcare, you can compare the effects of market volatilities on Bank of America and Cross Country 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 Cross Country. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Cross Country.
Diversification Opportunities for Bank of America and Cross Country
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Cross is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Cross Country Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cross Country Healthcare 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 Cross Country. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cross Country Healthcare has no effect on the direction of Bank of America i.e., Bank of America and Cross Country go up and down completely randomly.
Pair Corralation between Bank of America and Cross Country
Considering the 90-day investment horizon Bank of America is expected to generate 0.49 times more return on investment than Cross Country. However, Bank of America is 2.05 times less risky than Cross Country. It trades about 0.11 of its potential returns per unit of risk. Cross Country Healthcare is currently generating about -0.07 per unit of risk. If you would invest 2,806 in Bank of America on August 28, 2024 and sell it today you would earn a total of 1,944 from holding Bank of America or generate 69.28% 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. Cross Country Healthcare
Performance |
| Timeline |
| Bank of America |
| Cross Country Healthcare |
Bank of America and Cross Country Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Cross Country
The main advantage of trading using opposite Bank of America and Cross Country positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Cross Country 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 Cross Country will offset losses from the drop in Cross Country's long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Nova |
| Cross Country vs. ASGN Inc | Cross Country vs. Kforce Inc | Cross Country vs. Kelly Services A | Cross Country vs. AMN Healthcare Services |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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