Correlation Between Bank of America and Columbia Disciplined
Can any of the company-specific risk be diversified away by investing in both Bank of America and Columbia Disciplined 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 Columbia Disciplined 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 Columbia Disciplined Value, you can compare the effects of market volatilities on Bank of America and Columbia Disciplined 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 Columbia Disciplined. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Columbia Disciplined.
Diversification Opportunities for Bank of America and Columbia Disciplined
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Columbia is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Columbia Disciplined Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Disciplined 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 Columbia Disciplined. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Disciplined has no effect on the direction of Bank of America i.e., Bank of America and Columbia Disciplined go up and down completely randomly.
Pair Corralation between Bank of America and Columbia Disciplined
Considering the 90-day investment horizon Bank of America is expected to generate 2.7 times more return on investment than Columbia Disciplined. However, Bank of America is 2.7 times more volatile than Columbia Disciplined Value. It trades about 0.26 of its potential returns per unit of risk. Columbia Disciplined Value is currently generating about 0.34 per unit of risk. If you would invest 4,262 in Bank of America on August 28, 2024 and sell it today you would earn a total of 488.00 from holding Bank of America or generate 11.45% 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. Columbia Disciplined Value
Performance |
| Timeline |
| Bank of America |
| Columbia Disciplined |
Bank of America and Columbia Disciplined Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Columbia Disciplined
The main advantage of trading using opposite Bank of America and Columbia Disciplined positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Columbia Disciplined 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 Columbia Disciplined will offset losses from the drop in Columbia Disciplined's long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Nova |
| Columbia Disciplined vs. Federated Mdt Large | Columbia Disciplined vs. Calvert Large Cap | Columbia Disciplined vs. Aquagold International | Columbia Disciplined vs. Morningstar Unconstrained Allocation |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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