Correlation Between Bank of America and Choice Properties
Can any of the company-specific risk be diversified away by investing in both Bank of America and Choice Properties 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 Choice Properties 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 Choice Properties Real, you can compare the effects of market volatilities on Bank of America and Choice Properties 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 Choice Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Choice Properties.
Diversification Opportunities for Bank of America and Choice Properties
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Choice is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Choice Properties Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choice Properties Real 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 Choice Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choice Properties Real has no effect on the direction of Bank of America i.e., Bank of America and Choice Properties go up and down completely randomly.
Pair Corralation between Bank of America and Choice Properties
Assuming the 90 days trading horizon Bank of America is expected to generate 1.98 times more return on investment than Choice Properties. However, Bank of America is 1.98 times more volatile than Choice Properties Real. It trades about 0.35 of its potential returns per unit of risk. Choice Properties Real is currently generating about -0.05 per unit of risk. If you would invest 2,153 in Bank of America on September 3, 2024 and sell it today you would earn a total of 335.00 from holding Bank of America or generate 15.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Choice Properties Real
Performance |
| Timeline |
| Bank of America |
| Choice Properties Real |
Bank of America and Choice Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Choice Properties
The main advantage of trading using opposite Bank of America and Choice Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Choice Properties 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 Choice Properties will offset losses from the drop in Choice Properties' long position.| Bank of America vs. Diamond Estates Wines | Bank of America vs. Perseus Mining | Bank of America vs. Ramp Metals | Bank of America vs. HPQ Silicon Resources |
| Choice Properties vs. CT Real Estate | Choice Properties vs. Crombie Real Estate | Choice Properties vs. Allied Properties Real | Choice Properties vs. Dream Industrial Real |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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