Correlation Between Bank of America and RB Capital
Can any of the company-specific risk be diversified away by investing in both Bank of America and RB Capital 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 RB Capital 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 RB Capital Desenvolvimento, you can compare the effects of market volatilities on Bank of America and RB Capital 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 RB Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and RB Capital.
Diversification Opportunities for Bank of America and RB Capital
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and RSPD11 is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and RB Capital Desenvolvimento in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RB Capital Desenvolv 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 RB Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RB Capital Desenvolv has no effect on the direction of Bank of America i.e., Bank of America and RB Capital go up and down completely randomly.
Pair Corralation between Bank of America and RB Capital
Considering the 90-day investment horizon Bank of America is expected to generate 0.68 times more return on investment than RB Capital. However, Bank of America is 1.47 times less risky than RB Capital. It trades about 0.13 of its potential returns per unit of risk. RB Capital Desenvolvimento is currently generating about -0.02 per unit of risk. If you would invest 2,999 in Bank of America on August 31, 2024 and sell it today you would earn a total of 1,752 from holding Bank of America or generate 58.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Bank of America vs. RB Capital Desenvolvimento
Performance |
| Timeline |
| Bank of America |
| RB Capital Desenvolv |
Bank of America and RB Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and RB Capital
The main advantage of trading using opposite Bank of America and RB Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, RB Capital 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 RB Capital will offset losses from the drop in RB Capital'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 |
| RB Capital vs. Energisa SA | RB Capital vs. BTG Pactual Logstica | RB Capital vs. Plano Plano Desenvolvimento | RB Capital vs. Companhia Habitasul de |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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