Correlation Between Bank of America and TRANSCANADA
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By analyzing existing cross correlation between Bank of America and TRANSCANADA PIPELINES LTD, you can compare the effects of market volatilities on Bank of America and TRANSCANADA 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 TRANSCANADA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and TRANSCANADA.
Diversification Opportunities for Bank of America and TRANSCANADA
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and TRANSCANADA is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and TRANSCANADA PIPELINES LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRANSCANADA PIPELINES LTD 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 TRANSCANADA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRANSCANADA PIPELINES LTD has no effect on the direction of Bank of America i.e., Bank of America and TRANSCANADA go up and down completely randomly.
Pair Corralation between Bank of America and TRANSCANADA
Considering the 90-day investment horizon Bank of America is expected to generate 0.91 times more return on investment than TRANSCANADA. However, Bank of America is 1.1 times less risky than TRANSCANADA. It trades about 0.06 of its potential returns per unit of risk. TRANSCANADA PIPELINES LTD is currently generating about -0.02 per unit of risk. If you would invest 3,079 in Bank of America on August 30, 2024 and sell it today you would earn a total of 1,698 from holding Bank of America or generate 55.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 88.08% |
| Values | Daily Returns |
Bank of America vs. TRANSCANADA PIPELINES LTD
Performance |
| Timeline |
| Bank of America |
| TRANSCANADA PIPELINES LTD |
Bank of America and TRANSCANADA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and TRANSCANADA
The main advantage of trading using opposite Bank of America and TRANSCANADA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, TRANSCANADA 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 TRANSCANADA will offset losses from the drop in TRANSCANADA's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. JPMorgan Chase Co |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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