Correlation Between Bank of America and Canstar Resources
Can any of the company-specific risk be diversified away by investing in both Bank of America and Canstar Resources 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 Canstar Resources 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 Canstar Resources, you can compare the effects of market volatilities on Bank of America and Canstar Resources 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 Canstar Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Canstar Resources.
Diversification Opportunities for Bank of America and Canstar Resources
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Canstar is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Canstar Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canstar Resources 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 Canstar Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canstar Resources has no effect on the direction of Bank of America i.e., Bank of America and Canstar Resources go up and down completely randomly.
Pair Corralation between Bank of America and Canstar Resources
Considering the 90-day investment horizon Bank of America is expected to generate 1.26 times less return on investment than Canstar Resources. But when comparing it to its historical volatility, Bank of America is 6.98 times less risky than Canstar Resources. It trades about 0.1 of its potential returns per unit of risk. Canstar Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3.32 in Canstar Resources on September 1, 2024 and sell it today you would lose (1.19) from holding Canstar Resources or give up 35.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Canstar Resources
Performance |
| Timeline |
| Bank of America |
| Canstar Resources |
Bank of America and Canstar Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Canstar Resources
The main advantage of trading using opposite Bank of America and Canstar Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Canstar Resources 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 Canstar Resources will offset losses from the drop in Canstar Resources' 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 |
| Canstar Resources vs. Kenorland Minerals | Canstar Resources vs. Prime Mining Corp | Canstar Resources vs. Euro Manganese | Canstar Resources vs. Chalice Mining Limited |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |