Correlation Between Cumulus Media and Bank of America
Can any of the company-specific risk be diversified away by investing in both Cumulus Media and Bank of America 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 Cumulus Media and Bank of America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cumulus Media Class and Bank of America, you can compare the effects of market volatilities on Cumulus Media and Bank of America 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 Cumulus Media with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cumulus Media and Bank of America.
Diversification Opportunities for Cumulus Media and Bank of America
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cumulus and Bank is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Cumulus Media Class and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of America and Cumulus Media 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 Cumulus Media Class are associated (or correlated) with Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of America has no effect on the direction of Cumulus Media i.e., Cumulus Media and Bank of America go up and down completely randomly.
Pair Corralation between Cumulus Media and Bank of America
Given the investment horizon of 90 days Cumulus Media Class is expected to under-perform the Bank of America. In addition to that, Cumulus Media is 5.78 times more volatile than Bank of America. It trades about -0.08 of its total potential returns per unit of risk. Bank of America is currently generating about 0.09 per unit of volatility. If you would invest 1,657 in Bank of America on September 2, 2024 and sell it today you would earn a total of 641.00 from holding Bank of America or generate 38.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cumulus Media Class vs. Bank of America
Performance |
| Timeline |
| Cumulus Media Class |
| Bank of America |
Cumulus Media and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cumulus Media and Bank of America
The main advantage of trading using opposite Cumulus Media and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cumulus Media position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.| Cumulus Media vs. E W Scripps | Cumulus Media vs. Gray Television | Cumulus Media vs. ProSiebenSat1 Media AG | Cumulus Media vs. RTL Group SA |
| Bank of America vs. Bank of America | Bank of America vs. Bank of America | Bank of America vs. China Construction Bank | Bank of America vs. Bank of America |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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