Correlation Between Bank of America and Cobalt Power
Can any of the company-specific risk be diversified away by investing in both Bank of America and Cobalt Power 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 Cobalt Power 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 Cobalt Power Group, you can compare the effects of market volatilities on Bank of America and Cobalt Power 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 Cobalt Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Cobalt Power.
Diversification Opportunities for Bank of America and Cobalt Power
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Cobalt is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Cobalt Power Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cobalt Power Group 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 Cobalt Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cobalt Power Group has no effect on the direction of Bank of America i.e., Bank of America and Cobalt Power go up and down completely randomly.
Pair Corralation between Bank of America and Cobalt Power
Assuming the 90 days trading horizon Bank of America is expected to generate 0.24 times more return on investment than Cobalt Power. However, Bank of America is 4.14 times less risky than Cobalt Power. It trades about 0.31 of its potential returns per unit of risk. Cobalt Power Group is currently generating about -0.14 per unit of risk. If you would invest 2,177 in Bank of America on September 1, 2024 and sell it today you would earn a total of 311.00 from holding Bank of America or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Cobalt Power Group
Performance |
| Timeline |
| Bank of America |
| Cobalt Power Group |
Bank of America and Cobalt Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Cobalt Power
The main advantage of trading using opposite Bank of America and Cobalt Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Cobalt Power 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 Cobalt Power will offset losses from the drop in Cobalt Power's long position.| Bank of America vs. Brookfield Investments | Bank of America vs. Partners Value Investments | Bank of America vs. Labrador Iron Ore | Bank of America vs. Millennium Silver Corp |
| Cobalt Power vs. Kiplin Metals | Cobalt Power vs. Pure Energy Minerals | Cobalt Power vs. Noram Lithium Corp | Cobalt Power vs. Minnova Corp |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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