Correlation Between CP ALL and Bank of America
Can any of the company-specific risk be diversified away by investing in both CP ALL 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 CP ALL 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 CP ALL Public and Bank of America, you can compare the effects of market volatilities on CP ALL 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 CP ALL with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of CP ALL and Bank of America.
Diversification Opportunities for CP ALL and Bank of America
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CVPBF and Bank is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding CP ALL Public 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 CP ALL 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 CP ALL Public 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 CP ALL i.e., CP ALL and Bank of America go up and down completely randomly.
Pair Corralation between CP ALL and Bank of America
Assuming the 90 days horizon CP ALL is expected to generate 3.26 times less return on investment than Bank of America. But when comparing it to its historical volatility, CP ALL Public is 3.79 times less risky than Bank of America. It trades about 0.05 of its potential returns per unit of risk. Bank of America is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 18,684 in Bank of America on November 2, 2024 and sell it today you would earn a total of 1,316 from holding Bank of America or generate 7.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.17% |
| Values | Daily Returns |
CP ALL Public vs. Bank of America
Performance |
| Timeline |
| CP ALL Public |
| Bank of America |
CP ALL and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CP ALL and Bank of America
The main advantage of trading using opposite CP ALL and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CP ALL 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.| CP ALL vs. Edgewell Personal Care | CP ALL vs. Nike Inc | CP ALL vs. MYT Netherlands Parent | CP ALL vs. Delek Logistics Partners |
| Bank of America vs. The Connecticut Light | Bank of America vs. The Connecticut Light | Bank of America vs. The Connecticut Light | Bank of America vs. The Connecticut Light |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |