Correlation Between Commercial Vehicle and Bank of America
Can any of the company-specific risk be diversified away by investing in both Commercial Vehicle 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 Commercial Vehicle 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 Commercial Vehicle Group and Verizon Communications, you can compare the effects of market volatilities on Commercial Vehicle 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 Commercial Vehicle with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial Vehicle and Bank of America.
Diversification Opportunities for Commercial Vehicle and Bank of America
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Commercial and Bank is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Vehicle Group and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and Commercial Vehicle 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 Commercial Vehicle Group 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 Verizon Communications has no effect on the direction of Commercial Vehicle i.e., Commercial Vehicle and Bank of America go up and down completely randomly.
Pair Corralation between Commercial Vehicle and Bank of America
Assuming the 90 days trading horizon Commercial Vehicle Group is expected to under-perform the Bank of America. In addition to that, Commercial Vehicle is 2.26 times more volatile than Verizon Communications. It trades about -0.05 of its total potential returns per unit of risk. Verizon Communications is currently generating about 0.04 per unit of volatility. If you would invest 3,167 in Verizon Communications on September 14, 2024 and sell it today you would earn a total of 838.00 from holding Verizon Communications or generate 26.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Commercial Vehicle Group vs. Verizon Communications
Performance |
| Timeline |
| Commercial Vehicle |
| Verizon Communications |
Commercial Vehicle and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial Vehicle and Bank of America
The main advantage of trading using opposite Commercial Vehicle and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial Vehicle 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.| Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc |
| Bank of America vs. Commercial Vehicle Group | Bank of America vs. GameStop Corp | Bank of America vs. COMMERCIAL VEHICLE | Bank of America vs. Penn National Gaming |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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