Correlation Between Bank of America and Columbia ETF
Can any of the company-specific risk be diversified away by investing in both Bank of America and Columbia ETF 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 ETF 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 ETF Trust, you can compare the effects of market volatilities on Bank of America and Columbia ETF 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 ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Columbia ETF.
Diversification Opportunities for Bank of America and Columbia ETF
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Columbia is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Columbia ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia ETF 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 Columbia ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia ETF Trust has no effect on the direction of Bank of America i.e., Bank of America and Columbia ETF go up and down completely randomly.
Pair Corralation between Bank of America and Columbia ETF
Considering the 90-day investment horizon Bank of America is expected to generate 1.84 times more return on investment than Columbia ETF. However, Bank of America is 1.84 times more volatile than Columbia ETF Trust. It trades about 0.11 of its potential returns per unit of risk. Columbia ETF Trust is currently generating about 0.11 per unit of risk. If you would invest 3,236 in Bank of America on November 3, 2024 and sell it today you would earn a total of 1,394 from holding Bank of America or generate 43.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Columbia ETF Trust
Performance |
| Timeline |
| Bank of America |
| Columbia ETF Trust |
Bank of America and Columbia ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Columbia ETF
The main advantage of trading using opposite Bank of America and Columbia ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Columbia ETF 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 ETF will offset losses from the drop in Columbia ETF'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 ETF vs. Columbia Research Enhanced | Columbia ETF vs. RiverFront Dynamic Flex Cap | Columbia ETF vs. PIMCO RAFI ESG | Columbia ETF vs. DBX ETF Trust |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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