Correlation Between Bank of America and Shawcor
Can any of the company-specific risk be diversified away by investing in both Bank of America and Shawcor 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 Shawcor 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 Shawcor, you can compare the effects of market volatilities on Bank of America and Shawcor 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 Shawcor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Shawcor.
Diversification Opportunities for Bank of America and Shawcor
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Shawcor is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Shawcor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shawcor 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 Shawcor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shawcor has no effect on the direction of Bank of America i.e., Bank of America and Shawcor go up and down completely randomly.
Pair Corralation between Bank of America and Shawcor
If you would invest 2,771 in Bank of America on September 3, 2024 and sell it today you would earn a total of 1,933 from holding Bank of America or generate 69.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 0.32% |
| Values | Daily Returns |
Bank of America vs. Shawcor
Performance |
| Timeline |
| Bank of America |
| Shawcor |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank of America and Shawcor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Shawcor
The main advantage of trading using opposite Bank of America and Shawcor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Shawcor 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 Shawcor will offset losses from the drop in Shawcor's long position.| Bank of America vs. Partner Communications | Bank of America vs. Merck Company | Bank of America vs. Western Midstream Partners | Bank of America vs. Edgewise Therapeutics |
| Shawcor vs. STEP Energy Services | Shawcor vs. Total Energy Services | Shawcor vs. Trican Well Service | Shawcor vs. High Arctic Energy |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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