Correlation Between Carpenter Technology and Bank of America
Can any of the company-specific risk be diversified away by investing in both Carpenter Technology 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 Carpenter Technology 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 Carpenter Technology and Verizon Communications, you can compare the effects of market volatilities on Carpenter Technology 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 Carpenter Technology with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carpenter Technology and Bank of America.
Diversification Opportunities for Carpenter Technology and Bank of America
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Carpenter and Bank is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Carpenter Technology and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and Carpenter Technology 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 Carpenter Technology 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 Carpenter Technology i.e., Carpenter Technology and Bank of America go up and down completely randomly.
Pair Corralation between Carpenter Technology and Bank of America
If you would invest 3,185 in Verizon Communications on September 14, 2024 and sell it today you would earn a total of 821.00 from holding Verizon Communications or generate 25.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 0.0% |
| Values | Daily Returns |
Carpenter Technology vs. Verizon Communications
Performance |
| Timeline |
| Carpenter Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Verizon Communications |
Carpenter Technology and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carpenter Technology and Bank of America
The main advantage of trading using opposite Carpenter Technology and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carpenter Technology 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.| Carpenter Technology vs. PPHE HOTEL GROUP | Carpenter Technology vs. SEI INVESTMENTS | Carpenter Technology vs. Wyndham Hotels Resorts | Carpenter Technology vs. Virtus Investment Partners |
| Bank of America vs. Apple Inc | Bank of America vs. Apple Inc | Bank of America vs. Apple Inc | Bank of America vs. Apple Inc |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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