Correlation Between Bank of America and Centre Global
Can any of the company-specific risk be diversified away by investing in both Bank of America and Centre Global 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 Centre Global 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 Centre Global Infrastructure, you can compare the effects of market volatilities on Bank of America and Centre Global 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 Centre Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Centre Global.
Diversification Opportunities for Bank of America and Centre Global
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Centre is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Centre Global Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centre Global Infras 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 Centre Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centre Global Infras has no effect on the direction of Bank of America i.e., Bank of America and Centre Global go up and down completely randomly.
Pair Corralation between Bank of America and Centre Global
Considering the 90-day investment horizon Bank of America is expected to generate 1.28 times more return on investment than Centre Global. However, Bank of America is 1.28 times more volatile than Centre Global Infrastructure. It trades about 0.07 of its potential returns per unit of risk. Centre Global Infrastructure is currently generating about -0.05 per unit of risk. If you would invest 4,561 in Bank of America on September 13, 2024 and sell it today you would earn a total of 61.50 from holding Bank of America or generate 1.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of America vs. Centre Global Infrastructure
Performance |
| Timeline |
| Bank of America |
| Centre Global Infras |
Bank of America and Centre Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Centre Global
The main advantage of trading using opposite Bank of America and Centre Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Centre Global 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 Centre Global will offset losses from the drop in Centre Global's long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Canadian Imperial Bank |
| Centre Global vs. Blackrock Conservative Prprdptfinstttnl | Centre Global vs. Allianzgi Diversified Income | Centre Global vs. Elfun Diversified Fund | Centre Global vs. Stone Ridge Diversified |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |