Correlation Between B of A and C E

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Can any of the company-specific risk be diversified away by investing in both B of A and C E 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 C E 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 C E C, you can compare the effects of market volatilities on B of A and C E 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 C E. Check out your portfolio center. Please also check ongoing floating volatility patterns of B of A and C E.

Diversification Opportunities for B of A and C E

0.61
  Correlation Coefficient

Poor diversification

The 3 months correlation between B of A and C E is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bank Of America and C E C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C E C 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 C E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C E C has no effect on the direction of B of A i.e., B of A and C E go up and down completely randomly.

Pair Corralation between B of A and C E

Considering the 90-day investment horizon B of A is expected to generate 1.07 times less return on investment than C E. But when comparing it to its historical volatility, Bank Of America is 1.62 times less risky than C E. It trades about 0.04 of its potential returns per unit of risk. C E C is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  782.00  in C E C on July 7, 2022 and sell it today you would earn a total of  193.00  from holding C E C or generate 24.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Bank Of America  vs.  C E C

 Performance (%) 
       Timeline  
Bank Of America 
B of A Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bank Of America are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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

C E C 
C E Performance
17 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in C E C are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting fundamental indicators, C E exhibited solid returns over the last few months and may actually be approaching a breakup point.

C E Price Channel

B of A and C E Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with B of A and C E

The main advantage of trading using opposite B of A and C E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B of A position performs unexpectedly, C E 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 C E will offset losses from the drop in C E's long position.
B of A vs. Amazon Inc
The idea behind Bank Of America and C E C 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.
C E vs. Amazon 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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