Correlation Between Bank of America and Celtic Plc
Can any of the company-specific risk be diversified away by investing in both Bank of America and Celtic Plc 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 Celtic Plc 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 Celtic plc, you can compare the effects of market volatilities on Bank of America and Celtic Plc 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 Celtic Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Celtic Plc.
Diversification Opportunities for Bank of America and Celtic Plc
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Celtic is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Celtic plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celtic plc 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 Celtic Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celtic plc has no effect on the direction of Bank of America i.e., Bank of America and Celtic Plc go up and down completely randomly.
Pair Corralation between Bank of America and Celtic Plc
Considering the 90-day investment horizon Bank of America is expected to generate 0.59 times more return on investment than Celtic Plc. However, Bank of America is 1.7 times less risky than Celtic Plc. It trades about 0.27 of its potential returns per unit of risk. Celtic plc is currently generating about 0.04 per unit of risk. If you would invest 4,253 in Bank of America on August 30, 2024 and sell it today you would earn a total of 524.00 from holding Bank of America or generate 12.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Celtic plc
Performance |
| Timeline |
| Bank of America |
| Celtic plc |
Bank of America and Celtic Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Celtic Plc
The main advantage of trading using opposite Bank of America and Celtic Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Celtic Plc 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 Celtic Plc will offset losses from the drop in Celtic Plc's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. JPMorgan Chase Co |
| Celtic Plc vs. Warner Music Group | Celtic Plc vs. Live Nation Entertainment | Celtic Plc vs. Atlanta Braves Holdings, | Celtic Plc vs. Warner Bros Discovery |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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