Correlation Between Bank of America and Acadia Realty
Can any of the company-specific risk be diversified away by investing in both Bank of America and Acadia Realty 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 Acadia Realty 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 Acadia Realty Trust, you can compare the effects of market volatilities on Bank of America and Acadia Realty 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 Acadia Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Acadia Realty.
Diversification Opportunities for Bank of America and Acadia Realty
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bank and Acadia is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Acadia Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadia Realty 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 Acadia Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadia Realty Trust has no effect on the direction of Bank of America i.e., Bank of America and Acadia Realty go up and down completely randomly.
Pair Corralation between Bank of America and Acadia Realty
Considering the 90-day investment horizon Bank of America is expected to generate 0.75 times more return on investment than Acadia Realty. However, Bank of America is 1.33 times less risky than Acadia Realty. It trades about 0.08 of its potential returns per unit of risk. Acadia Realty Trust is currently generating about -0.04 per unit of risk. If you would invest 4,452 in Bank of America on November 7, 2024 and sell it today you would earn a total of 219.00 from holding Bank of America or generate 4.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.31% |
| Values | Daily Returns |
Bank of America vs. Acadia Realty Trust
Performance |
| Timeline |
| Bank of America |
| Acadia Realty Trust |
Bank of America and Acadia Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Acadia Realty
The main advantage of trading using opposite Bank of America and Acadia Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Acadia Realty 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 Acadia Realty will offset losses from the drop in Acadia Realty's long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Royal Bank of | Bank of America vs. Canadian Imperial Bank |
| Acadia Realty vs. BROADWIND ENRGY | Acadia Realty vs. SPARTAN STORES | Acadia Realty vs. Fukuyama Transporting Co | Acadia Realty vs. COPLAND ROAD CAPITAL |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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