Correlation Between Bank of America and ChoiceOne Financial
Can any of the company-specific risk be diversified away by investing in both Bank of America and ChoiceOne Financial 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 ChoiceOne Financial 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 ChoiceOne Financial Services, you can compare the effects of market volatilities on Bank of America and ChoiceOne Financial 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 ChoiceOne Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and ChoiceOne Financial.
Diversification Opportunities for Bank of America and ChoiceOne Financial
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and ChoiceOne is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and ChoiceOne Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChoiceOne Financial 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 ChoiceOne Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChoiceOne Financial has no effect on the direction of Bank of America i.e., Bank of America and ChoiceOne Financial go up and down completely randomly.
Pair Corralation between Bank of America and ChoiceOne Financial
Considering the 90-day investment horizon Bank of America is expected to generate 1.56 times less return on investment than ChoiceOne Financial. But when comparing it to its historical volatility, Bank of America is 1.34 times less risky than ChoiceOne Financial. It trades about 0.23 of its potential returns per unit of risk. ChoiceOne Financial Services is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 3,104 in ChoiceOne Financial Services on August 24, 2024 and sell it today you would earn a total of 546.00 from holding ChoiceOne Financial Services or generate 17.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. ChoiceOne Financial Services
Performance |
| Timeline |
| Bank of America |
| ChoiceOne Financial |
Bank of America and ChoiceOne Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and ChoiceOne Financial
The main advantage of trading using opposite Bank of America and ChoiceOne Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, ChoiceOne Financial 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 ChoiceOne Financial will offset losses from the drop in ChoiceOne Financial's long position.| Bank of America vs. Amtech Systems | Bank of America vs. Gold Fields Ltd | Bank of America vs. Aegean Airlines SA | Bank of America vs. Merck Company |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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