Correlation Between Bank of America and SmartCentres Real
Can any of the company-specific risk be diversified away by investing in both Bank of America and SmartCentres 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 SmartCentres 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 SmartCentres Real Estate, you can compare the effects of market volatilities on Bank of America and SmartCentres 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 SmartCentres Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and SmartCentres Real.
Diversification Opportunities for Bank of America and SmartCentres Real
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and SmartCentres is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and SmartCentres Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartCentres 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 SmartCentres Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartCentres Real Estate has no effect on the direction of Bank of America i.e., Bank of America and SmartCentres Real go up and down completely randomly.
Pair Corralation between Bank of America and SmartCentres Real
Assuming the 90 days trading horizon Bank of America is expected to generate 1.34 times more return on investment than SmartCentres Real. However, Bank of America is 1.34 times more volatile than SmartCentres Real Estate. It trades about 0.1 of its potential returns per unit of risk. SmartCentres Real Estate is currently generating about 0.05 per unit of risk. If you would invest 1,491 in Bank of America on September 12, 2024 and sell it today you would earn a total of 891.00 from holding Bank of America or generate 59.76% 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. SmartCentres Real Estate
Performance |
| Timeline |
| Bank of America |
| SmartCentres Real Estate |
Bank of America and SmartCentres Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and SmartCentres Real
The main advantage of trading using opposite Bank of America and SmartCentres Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, SmartCentres 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 SmartCentres Real will offset losses from the drop in SmartCentres Real's long position.| Bank of America vs. Quorum Information Technologies | Bank of America vs. Forsys Metals Corp | Bank of America vs. Rogers Communications | Bank of America vs. Getty Copper |
| SmartCentres Real vs. RioCan Real Estate | SmartCentres Real vs. NorthWest Healthcare Properties | SmartCentres Real vs. HR Real Estate | SmartCentres Real vs. Choice Properties 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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