Correlation Between Bank of America and Bridgemarq Real
Can any of the company-specific risk be diversified away by investing in both Bank of America and Bridgemarq Real 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 Bridgemarq Real 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 Bridgemarq Real Estate, you can compare the effects of market volatilities on Bank of America and Bridgemarq Real 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 Bridgemarq Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Bridgemarq Real.
Diversification Opportunities for Bank of America and Bridgemarq Real
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Bridgemarq is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Bridgemarq Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgemarq Real Estate 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 Bridgemarq Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgemarq Real Estate has no effect on the direction of Bank of America i.e., Bank of America and Bridgemarq Real go up and down completely randomly.
Pair Corralation between Bank of America and Bridgemarq Real
Assuming the 90 days trading horizon Bank of America is expected to under-perform the Bridgemarq Real. But the stock apears to be less risky and, when comparing its historical volatility, Bank of America is 1.39 times less risky than Bridgemarq Real. The stock trades about -0.16 of its potential returns per unit of risk. The Bridgemarq Real Estate is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,477 in Bridgemarq Real Estate on September 18, 2024 and sell it today you would earn a total of 19.00 from holding Bridgemarq Real Estate or generate 1.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Bridgemarq Real Estate
Performance |
| Timeline |
| Bank of America |
| Bridgemarq Real Estate |
Bank of America and Bridgemarq Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Bridgemarq Real
The main advantage of trading using opposite Bank of America and Bridgemarq Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Bridgemarq Real 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 Bridgemarq Real will offset losses from the drop in Bridgemarq Real's long position.| Bank of America vs. SalesforceCom CDR | Bank of America vs. Bragg Gaming Group | Bank of America vs. Lion One Metals | Bank of America vs. Bank of Nova |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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