Correlation Between Bank of America and Urban One
Can any of the company-specific risk be diversified away by investing in both Bank of America and Urban One 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 Urban One 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 Urban One, you can compare the effects of market volatilities on Bank of America and Urban One 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 Urban One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Urban One.
Diversification Opportunities for Bank of America and Urban One
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Urban is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Urban One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Urban One 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 Urban One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Urban One has no effect on the direction of Bank of America i.e., Bank of America and Urban One go up and down completely randomly.
Pair Corralation between Bank of America and Urban One
Considering the 90-day investment horizon Bank of America is expected to generate 1.89 times less return on investment than Urban One. But when comparing it to its historical volatility, Bank of America is 3.42 times less risky than Urban One. It trades about 0.31 of its potential returns per unit of risk. Urban One is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 135.00 in Urban One on September 1, 2024 and sell it today you would earn a total of 30.00 from holding Urban One or generate 22.22% 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. Urban One
Performance |
| Timeline |
| Bank of America |
| Urban One |
Bank of America and Urban One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Urban One
The main advantage of trading using opposite Bank of America and Urban One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Urban One 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 Urban One will offset losses from the drop in Urban One'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 |
| Urban One vs. TVA Group | Urban One vs. Saga Communications | Urban One vs. E W Scripps | Urban One vs. Cumulus Media Class |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |