Correlation Between Bank of America and Columbia Large
Can any of the company-specific risk be diversified away by investing in both Bank of America and Columbia Large 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 Large 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 Large Cap, you can compare the effects of market volatilities on Bank of America and Columbia Large 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 Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Columbia Large.
Diversification Opportunities for Bank of America and Columbia Large
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Columbia is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Columbia Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Large Cap 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 Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Large Cap has no effect on the direction of Bank of America i.e., Bank of America and Columbia Large go up and down completely randomly.
Pair Corralation between Bank of America and Columbia Large
Considering the 90-day investment horizon Bank of America is expected to generate 1.8 times more return on investment than Columbia Large. However, Bank of America is 1.8 times more volatile than Columbia Large Cap. It trades about 0.05 of its potential returns per unit of risk. Columbia Large Cap is currently generating about 0.06 per unit of risk. If you would invest 3,099 in Bank of America on November 27, 2024 and sell it today you would earn a total of 1,347 from holding Bank of America or generate 43.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Columbia Large Cap
Performance |
| Timeline |
| Bank of America |
| Columbia Large Cap |
Bank of America and Columbia Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Columbia Large
The main advantage of trading using opposite Bank of America and Columbia Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Columbia Large 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 Large will offset losses from the drop in Columbia Large's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
| Columbia Large vs. Columbia Large Cap | Columbia Large vs. Columbia Select Large | Columbia Large vs. Columbia Large Cap | Columbia Large vs. Columbia Capital 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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