Correlation Between Bank of America and Companhia
Can any of the company-specific risk be diversified away by investing in both Bank of America and Companhia 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 Companhia 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 Companhia de Saneamento, you can compare the effects of market volatilities on Bank of America and Companhia 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 Companhia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Companhia.
Diversification Opportunities for Bank of America and Companhia
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bank and Companhia is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Companhia de Saneamento in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia de Saneamento 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 Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia de Saneamento has no effect on the direction of Bank of America i.e., Bank of America and Companhia go up and down completely randomly.
Pair Corralation between Bank of America and Companhia
Considering the 90-day investment horizon Bank of America is expected to generate 0.77 times more return on investment than Companhia. However, Bank of America is 1.3 times less risky than Companhia. It trades about 0.13 of its potential returns per unit of risk. Companhia de Saneamento is currently generating about 0.04 per unit of risk. If you would invest 3,290 in Bank of America on August 29, 2024 and sell it today you would earn a total of 1,496 from holding Bank of America or generate 45.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.05% |
| Values | Daily Returns |
Bank of America vs. Companhia de Saneamento
Performance |
| Timeline |
| Bank of America |
| Companhia de Saneamento |
Bank of America and Companhia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Companhia
The main advantage of trading using opposite Bank of America and Companhia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Companhia 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 Companhia will offset losses from the drop in Companhia'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. JPMorgan Chase Co |
| Companhia vs. KINGBOARD CHEMICAL | Companhia vs. CHEMICAL INDUSTRIES | Companhia vs. ASURE SOFTWARE | Companhia vs. Sanyo Chemical Industries |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |