Correlation Between Connecticut Light and Bank of AmericaPFD SER B
Can any of the company-specific risk be diversified away by investing in both Connecticut Light and Bank of AmericaPFD SER B 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 Connecticut Light and Bank of AmericaPFD SER B into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Connecticut Light and Bank of America, you can compare the effects of market volatilities on Connecticut Light and Bank of AmericaPFD SER B 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 Connecticut Light with a short position of Bank of AmericaPFD SER B . Check out your portfolio center. Please also check ongoing floating volatility patterns of Connecticut Light and Bank of AmericaPFD SER B .
Diversification Opportunities for Connecticut Light and Bank of AmericaPFD SER B
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Connecticut and Bank is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding The Connecticut Light and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of AmericaPFD SER B and Connecticut Light 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 The Connecticut Light are associated (or correlated) with Bank of AmericaPFD SER B . 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 AmericaPFD SER B has no effect on the direction of Connecticut Light i.e., Connecticut Light and Bank of AmericaPFD SER B go up and down completely randomly.
Pair Corralation between Connecticut Light and Bank of AmericaPFD SER B
Assuming the 90 days horizon The Connecticut Light is expected to generate 1.51 times more return on investment than Bank of AmericaPFD SER B . However, Connecticut Light is 1.51 times more volatile than Bank of America. It trades about 0.04 of its potential returns per unit of risk. Bank of America is currently generating about -0.21 per unit of risk. If you would invest 3,800 in The Connecticut Light on September 1, 2024 and sell it today you would earn a total of 50.00 from holding The Connecticut Light or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Connecticut Light vs. Bank of America
Performance |
| Timeline |
| Connecticut Light |
| Bank of AmericaPFD SER B |
Connecticut Light and Bank of AmericaPFD SER B Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Connecticut Light and Bank of AmericaPFD SER B
The main advantage of trading using opposite Connecticut Light and Bank of AmericaPFD SER B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Connecticut Light position performs unexpectedly, Bank of AmericaPFD SER B 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 AmericaPFD SER B will offset losses from the drop in Bank of AmericaPFD SER B 's long position.| Connecticut Light vs. Southern Company | Connecticut Light vs. Duke Energy | Connecticut Light vs. Duke Energy | Connecticut Light vs. National Grid PLC |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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