Correlation Between Bank of America and Brookfield Office
Can any of the company-specific risk be diversified away by investing in both Bank of America and Brookfield Office 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 Brookfield Office 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 Brookfield Office Cl, you can compare the effects of market volatilities on Bank of America and Brookfield Office 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 Brookfield Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Brookfield Office.
Diversification Opportunities for Bank of America and Brookfield Office
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Brookfield is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Brookfield Office Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Office 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 Brookfield Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Office has no effect on the direction of Bank of America i.e., Bank of America and Brookfield Office go up and down completely randomly.
Pair Corralation between Bank of America and Brookfield Office
Assuming the 90 days trading horizon Bank of America is expected to under-perform the Brookfield Office. In addition to that, Bank of America is 1.04 times more volatile than Brookfield Office Cl. It trades about -0.07 of its total potential returns per unit of risk. Brookfield Office Cl is currently generating about 0.03 per unit of volatility. If you would invest 1,514 in Brookfield Office Cl on October 12, 2024 and sell it today you would earn a total of 10.00 from holding Brookfield Office Cl or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Brookfield Office Cl
Performance |
| Timeline |
| Bank of America |
| Brookfield Office |
Bank of America and Brookfield Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Brookfield Office
The main advantage of trading using opposite Bank of America and Brookfield Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Brookfield Office 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 Brookfield Office will offset losses from the drop in Brookfield Office's long position.| Bank of America vs. Western Copper and | Bank of America vs. Advent Wireless | Bank of America vs. WELL Health Technologies | Bank of America vs. Wilmington Capital Management |
| Brookfield Office vs. JPMorgan Chase Co | Brookfield Office vs. Bank of America | Brookfield Office vs. Toronto Dominion Bank | Brookfield Office vs. Royal Bank of |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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