Correlation Between Bank of America and Presidio Property
Can any of the company-specific risk be diversified away by investing in both Bank of America and Presidio 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 Presidio 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 Presidio Property Trust, you can compare the effects of market volatilities on Bank of America and Presidio 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 Presidio Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Presidio Property.
Diversification Opportunities for Bank of America and Presidio Property
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Presidio is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Presidio Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Presidio Property 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 Presidio Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Presidio Property Trust has no effect on the direction of Bank of America i.e., Bank of America and Presidio Property go up and down completely randomly.
Pair Corralation between Bank of America and Presidio Property
Considering the 90-day investment horizon Bank of America is expected to generate 2.11 times more return on investment than Presidio Property. However, Bank of America is 2.11 times more volatile than Presidio Property Trust. It trades about 0.29 of its potential returns per unit of risk. Presidio Property Trust is currently generating about 0.02 per unit of risk. If you would invest 4,231 in Bank of America on August 31, 2024 and sell it today you would earn a total of 546.00 from holding Bank of America or generate 12.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Presidio Property Trust
Performance |
| Timeline |
| Bank of America |
| Presidio Property Trust |
Bank of America and Presidio Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Presidio Property
The main advantage of trading using opposite Bank of America and Presidio Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Presidio 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 Presidio Property will offset losses from the drop in Presidio Property'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 |
| Presidio Property vs. FAT Brands | Presidio Property vs. Atlanticus Holdings Corp | Presidio Property vs. Presidio Property 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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