Correlation Between Bank of America and Picton Property
Can any of the company-specific risk be diversified away by investing in both Bank of America and Picton Property 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 Picton Property 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 Picton Property Income, you can compare the effects of market volatilities on Bank of America and Picton Property 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 Picton Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Picton Property.
Diversification Opportunities for Bank of America and Picton Property
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bank and Picton is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Picton Property Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Picton Property Income 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 Picton Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Picton Property Income has no effect on the direction of Bank of America i.e., Bank of America and Picton Property go up and down completely randomly.
Pair Corralation between Bank of America and Picton Property
Considering the 90-day investment horizon Bank of America is expected to under-perform the Picton Property. But the stock apears to be less risky and, when comparing its historical volatility, Bank of America is 1.77 times less risky than Picton Property. The stock trades about -0.36 of its potential returns per unit of risk. The Picton Property Income is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 6,022 in Picton Property Income on November 28, 2024 and sell it today you would earn a total of 568.00 from holding Picton Property Income or generate 9.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of America vs. Picton Property Income
Performance |
| Timeline |
| Bank of America |
| Picton Property Income |
Bank of America and Picton Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Picton Property
The main advantage of trading using opposite Bank of America and Picton Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Picton Property 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 Picton Property will offset losses from the drop in Picton Property'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 |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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