Correlation Between Bank of America and Cellnex Telecom
Can any of the company-specific risk be diversified away by investing in both Bank of America and Cellnex Telecom 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 Cellnex Telecom 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 Cellnex Telecom SA, you can compare the effects of market volatilities on Bank of America and Cellnex Telecom 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 Cellnex Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Cellnex Telecom.
Diversification Opportunities for Bank of America and Cellnex Telecom
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Cellnex is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Cellnex Telecom SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cellnex Telecom SA 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 Cellnex Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cellnex Telecom SA has no effect on the direction of Bank of America i.e., Bank of America and Cellnex Telecom go up and down completely randomly.
Pair Corralation between Bank of America and Cellnex Telecom
Considering the 90-day investment horizon Bank of America is expected to generate 0.72 times more return on investment than Cellnex Telecom. However, Bank of America is 1.4 times less risky than Cellnex Telecom. It trades about 0.12 of its potential returns per unit of risk. Cellnex Telecom SA is currently generating about -0.01 per unit of risk. If you would invest 3,495 in Bank of America on September 1, 2024 and sell it today you would earn a total of 1,256 from holding Bank of America or generate 35.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 86.17% |
| Values | Daily Returns |
Bank of America vs. Cellnex Telecom SA
Performance |
| Timeline |
| Bank of America |
| Cellnex Telecom SA |
Bank of America and Cellnex Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Cellnex Telecom
The main advantage of trading using opposite Bank of America and Cellnex Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Cellnex Telecom 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 Cellnex Telecom will offset losses from the drop in Cellnex Telecom'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 |
| Cellnex Telecom vs. CBRE Group Class | Cellnex Telecom vs. Cushman Wakefield plc | Cellnex Telecom vs. Newmark Group | Cellnex Telecom vs. Colliers International Group |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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