Correlation Between Bank of America and Capitol Series
Can any of the company-specific risk be diversified away by investing in both Bank of America and Capitol Series 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 Capitol Series 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 Capitol Series Trust, you can compare the effects of market volatilities on Bank of America and Capitol Series 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 Capitol Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Capitol Series.
Diversification Opportunities for Bank of America and Capitol Series
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Capitol is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Capitol Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Series Trust 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 Capitol Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Series Trust has no effect on the direction of Bank of America i.e., Bank of America and Capitol Series go up and down completely randomly.
Pair Corralation between Bank of America and Capitol Series
Considering the 90-day investment horizon Bank of America is expected to generate 1.1 times less return on investment than Capitol Series. In addition to that, Bank of America is 1.59 times more volatile than Capitol Series Trust. It trades about 0.06 of its total potential returns per unit of risk. Capitol Series Trust is currently generating about 0.11 per unit of volatility. If you would invest 2,834 in Capitol Series Trust on September 3, 2024 and sell it today you would earn a total of 1,810 from holding Capitol Series Trust or generate 63.87% 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. Capitol Series Trust
Performance |
| Timeline |
| Bank of America |
| Capitol Series Trust |
Bank of America and Capitol Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Capitol Series
The main advantage of trading using opposite Bank of America and Capitol Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Capitol Series 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 Capitol Series will offset losses from the drop in Capitol Series' long position.| Bank of America vs. Partner Communications | Bank of America vs. Merck Company | Bank of America vs. Western Midstream Partners | Bank of America vs. Edgewise Therapeutics |
| Capitol Series vs. First Trust LongShort | Capitol Series vs. Cambria Global Momentum | Capitol Series vs. Cambria Global Asset | Capitol Series vs. ProShares Hedge Replication |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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