Correlation Between Bank of America and Cornerstone Strategic
Can any of the company-specific risk be diversified away by investing in both Bank of America and Cornerstone Strategic 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 Cornerstone Strategic 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 Cornerstone Strategic Return, you can compare the effects of market volatilities on Bank of America and Cornerstone Strategic 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 Cornerstone Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Cornerstone Strategic.
Diversification Opportunities for Bank of America and Cornerstone Strategic
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Cornerstone is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Cornerstone Strategic Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornerstone Strategic 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 Cornerstone Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornerstone Strategic has no effect on the direction of Bank of America i.e., Bank of America and Cornerstone Strategic go up and down completely randomly.
Pair Corralation between Bank of America and Cornerstone Strategic
Considering the 90-day investment horizon Bank of America is expected to generate 2.06 times more return on investment than Cornerstone Strategic. However, Bank of America is 2.06 times more volatile than Cornerstone Strategic Return. It trades about 0.21 of its potential returns per unit of risk. Cornerstone Strategic Return is currently generating about 0.36 per unit of risk. If you would invest 4,234 in Bank of America on August 24, 2024 and sell it today you would earn a total of 412.00 from holding Bank of America or generate 9.73% 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. Cornerstone Strategic Return
Performance |
| Timeline |
| Bank of America |
| Cornerstone Strategic |
Bank of America and Cornerstone Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Cornerstone Strategic
The main advantage of trading using opposite Bank of America and Cornerstone Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Cornerstone Strategic 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 Cornerstone Strategic will offset losses from the drop in Cornerstone Strategic'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 |
| Cornerstone Strategic vs. MFS Investment Grade | Cornerstone Strategic vs. Eaton Vance National | Cornerstone Strategic vs. Blackrock Muniyield Quality | Cornerstone Strategic vs. Munivest Fund |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |