Correlation Between Bank of America and Corsair Gaming
Can any of the company-specific risk be diversified away by investing in both Bank of America and Corsair Gaming 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 Bank of America and Corsair Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and Corsair Gaming, you can compare the effects of market volatilities on Bank of America and Corsair Gaming 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 Bank of America with a short position of Corsair Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Corsair Gaming.
Diversification Opportunities for Bank of America and Corsair Gaming
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Corsair is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Corsair Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corsair Gaming and Bank of America 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 Verizon Communications are associated (or correlated) with Corsair Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corsair Gaming has no effect on the direction of Bank of America i.e., Bank of America and Corsair Gaming go up and down completely randomly.
Pair Corralation between Bank of America and Corsair Gaming
Assuming the 90 days trading horizon Verizon Communications is expected to under-perform the Corsair Gaming. But the stock apears to be less risky and, when comparing its historical volatility, Verizon Communications is 4.24 times less risky than Corsair Gaming. The stock trades about -0.02 of its potential returns per unit of risk. The Corsair Gaming is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 605.00 in Corsair Gaming on September 23, 2024 and sell it today you would earn a total of 17.00 from holding Corsair Gaming or generate 2.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Verizon Communications vs. Corsair Gaming
Performance |
Timeline |
Verizon Communications |
Corsair Gaming |
Bank of America and Corsair Gaming Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of America and Corsair Gaming
The main advantage of trading using opposite Bank of America and Corsair Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Corsair Gaming 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 Corsair Gaming will offset losses from the drop in Corsair Gaming's long position.Bank of America vs. Computer And Technologies | Bank of America vs. MAGNUM MINING EXP | Bank of America vs. Perseus Mining Limited | Bank of America vs. G III Apparel Group |
Corsair Gaming vs. KIMBALL ELECTRONICS | Corsair Gaming vs. LPKF Laser Electronics | Corsair Gaming vs. Verizon Communications | Corsair Gaming vs. Richardson Electronics |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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