Correlation Between Bank of America and Tropical Canning
Can any of the company-specific risk be diversified away by investing in both Bank of America and Tropical Canning 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 Tropical Canning 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 Tropical Canning Public, you can compare the effects of market volatilities on Bank of America and Tropical Canning 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 Tropical Canning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Tropical Canning.
Diversification Opportunities for Bank of America and Tropical Canning
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and Tropical is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Tropical Canning Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tropical Canning Public 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 Tropical Canning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tropical Canning Public has no effect on the direction of Bank of America i.e., Bank of America and Tropical Canning go up and down completely randomly.
Pair Corralation between Bank of America and Tropical Canning
Considering the 90-day investment horizon Bank of America is expected to generate 44.51 times less return on investment than Tropical Canning. But when comparing it to its historical volatility, Bank of America is 58.21 times less risky than Tropical Canning. It trades about 0.1 of its potential returns per unit of risk. Tropical Canning Public is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 760.00 in Tropical Canning Public on September 1, 2024 and sell it today you would lose (65.00) from holding Tropical Canning Public or give up 8.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Bank of America vs. Tropical Canning Public
Performance |
| Timeline |
| Bank of America |
| Tropical Canning Public |
Bank of America and Tropical Canning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Tropical Canning
The main advantage of trading using opposite Bank of America and Tropical Canning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Tropical Canning 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 Tropical Canning will offset losses from the drop in Tropical Canning's long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Tropical Canning vs. MK Restaurant Group | Tropical Canning vs. TRC Construction Public | Tropical Canning vs. Bangkok Expressway and | Tropical Canning vs. Lohakit Metal Public |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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