Correlation Between Bank of America and Cochlear
Can any of the company-specific risk be diversified away by investing in both Bank of America and Cochlear 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 Cochlear 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 Cochlear, you can compare the effects of market volatilities on Bank of America and Cochlear 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 Cochlear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Cochlear.
Diversification Opportunities for Bank of America and Cochlear
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Cochlear is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Cochlear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cochlear 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 Cochlear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cochlear has no effect on the direction of Bank of America i.e., Bank of America and Cochlear go up and down completely randomly.
Pair Corralation between Bank of America and Cochlear
Considering the 90-day investment horizon Bank of America is expected to generate 1.05 times more return on investment than Cochlear. However, Bank of America is 1.05 times more volatile than Cochlear. It trades about 0.1 of its potential returns per unit of risk. Cochlear is currently generating about 0.06 per unit of risk. If you would invest 2,820 in Bank of America on August 31, 2024 and sell it today you would earn a total of 1,931 from holding Bank of America or generate 68.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.94% |
| Values | Daily Returns |
Bank of America vs. Cochlear
Performance |
| Timeline |
| Bank of America |
| Cochlear |
Bank of America and Cochlear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Cochlear
The main advantage of trading using opposite Bank of America and Cochlear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Cochlear 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 Cochlear will offset losses from the drop in Cochlear's long position.| Bank of America vs. RLJ Lodging Trust | Bank of America vs. Aquagold International | Bank of America vs. Stepstone Group | Bank of America vs. Morningstar Unconstrained Allocation |
| Cochlear vs. Aurelia Metals | Cochlear vs. Alto Metals | Cochlear vs. Richmond Vanadium Technology | Cochlear vs. Centuria Industrial Reit |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |