Correlation Between Bank of America and Matson
Can any of the company-specific risk be diversified away by investing in both Bank of America and Matson 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 Matson 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 Matson Inc, you can compare the effects of market volatilities on Bank of America and Matson 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 Matson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Matson.
Diversification Opportunities for Bank of America and Matson
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Matson is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Matson Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matson Inc 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 Matson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matson Inc has no effect on the direction of Bank of America i.e., Bank of America and Matson go up and down completely randomly.
Pair Corralation between Bank of America and Matson
Considering the 90-day investment horizon Bank of America is expected to generate 1.17 times less return on investment than Matson. But when comparing it to its historical volatility, Bank of America is 1.93 times less risky than Matson. It trades about 0.29 of its potential returns per unit of risk. Matson Inc is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 13,332 in Matson Inc on August 31, 2024 and sell it today you would earn a total of 1,976 from holding Matson Inc or generate 14.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bank of America vs. Matson Inc
Performance |
| Timeline |
| Bank of America |
| Matson Inc |
Bank of America and Matson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Matson
The main advantage of trading using opposite Bank of America and Matson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Matson 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 Matson will offset losses from the drop in Matson's long position.| Bank of America vs. RLJ Lodging Trust | Bank of America vs. Aquagold International | Bank of America vs. Stepstone Group | Bank of America 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| 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 | |
| Stocks Directory Find actively traded stocks across global markets |