Correlation Between B of A and Apartment Investment

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Can any of the company-specific risk be diversified away by investing in both B of A and Apartment Investment 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 B of A and Apartment Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Of America and Apartment Investment And, you can compare the effects of market volatilities on B of A and Apartment Investment 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 B of A with a short position of Apartment Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of B of A and Apartment Investment.

Diversification Opportunities for B of A and Apartment Investment

-0.24
  Correlation Coefficient

Very good diversification

The 3 months correlation between B of A and Apartment is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Bank Of America and Apartment Investment And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apartment Investment And and B of A 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 Bank Of America are associated (or correlated) with Apartment Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apartment Investment And has no effect on the direction of B of A i.e., B of A and Apartment Investment go up and down completely randomly.

Pair Corralation between B of A and Apartment Investment

Considering the 90-day investment horizon B of A is expected to generate 3.82 times less return on investment than Apartment Investment. But when comparing it to its historical volatility, Bank Of America is 1.02 times less risky than Apartment Investment. It trades about 0.15 of its potential returns per unit of risk. Apartment Investment And is currently generating about 0.56 of returns per unit of risk over similar time horizon. If you would invest  659.00  in Apartment Investment And on May 10, 2022 and sell it today you would earn a total of  187.00  from holding Apartment Investment And or generate 28.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Bank Of America  vs.  Apartment Investment And

 Performance (%) 
       Timeline  
Bank Of America 
B of A Performance
0 of 100
Over the last 90 days Bank Of America has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, B of A is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

B of A Price Channel

Apartment Investment And 
Apartment Performance
26 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Apartment Investment And are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain forward indicators, Apartment Investment showed solid returns over the last few months and may actually be approaching a breakup point.

Apartment Price Channel

B of A and Apartment Investment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with B of A and Apartment Investment

The main advantage of trading using opposite B of A and Apartment Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B of A position performs unexpectedly, Apartment Investment 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 Apartment Investment will offset losses from the drop in Apartment Investment's long position.
The idea behind Bank Of America and Apartment Investment And pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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