Correlation Between Bank of America and Starco Brands
Can any of the company-specific risk be diversified away by investing in both Bank of America and Starco Brands 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 Starco Brands 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 Starco Brands, you can compare the effects of market volatilities on Bank of America and Starco Brands 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 Starco Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Starco Brands.
Diversification Opportunities for Bank of America and Starco Brands
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Starco is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Starco Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starco Brands 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 Starco Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starco Brands has no effect on the direction of Bank of America i.e., Bank of America and Starco Brands go up and down completely randomly.
Pair Corralation between Bank of America and Starco Brands
Considering the 90-day investment horizon Bank of America is expected to generate 1.58 times less return on investment than Starco Brands. But when comparing it to its historical volatility, Bank of America is 5.06 times less risky than Starco Brands. It trades about 0.05 of its potential returns per unit of risk. Starco Brands is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Starco Brands on August 24, 2024 and sell it today you would lose (9.04) from holding Starco Brands or give up 60.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Starco Brands
Performance |
| Timeline |
| Bank of America |
| Starco Brands |
Bank of America and Starco Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Starco Brands
The main advantage of trading using opposite Bank of America and Starco Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Starco Brands 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 Starco Brands will offset losses from the drop in Starco Brands' long position.| Bank of America vs. Amtech Systems | Bank of America vs. Gold Fields Ltd | Bank of America vs. Aegean Airlines SA | Bank of America vs. Merck Company |
| Starco Brands vs. Select Energy Services | Starco Brands vs. Orion Engineered Carbons | Starco Brands vs. Element Solutions | Starco Brands vs. Kronos Worldwide |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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