Correlation Between Bank of America and Collaborative Investment

Can any of the company-specific risk be diversified away by investing in both Bank of America and Collaborative 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 Bank of America and Collaborative 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 Collaborative Investment Series, you can compare the effects of market volatilities on Bank of America and Collaborative 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 Bank of America with a short position of Collaborative Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Collaborative Investment.

Diversification Opportunities for Bank of America and Collaborative Investment

0.0

Correlation Coefficient

Bank of America  Collaborative Investment

Pay attention - limited upside

The 3 months correlation between Bank and Collaborative is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Collaborative Investment Serie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collaborative Investment 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 Bank of America are associated (or correlated) with Collaborative Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collaborative Investment has no effect on the direction of Bank of America i.e., Bank of America and Collaborative Investment go up and down completely randomly.

Pair Corralation between Bank of America and Collaborative Investment

If you would invest  0.00  in Collaborative Investment Series on October 7, 2024 and sell it today you would earn a total of  0.00  from holding Collaborative Investment Series or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Bank of America  vs.  Collaborative Investment Serie

Bank of America

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of America are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Bank of America exhibited solid returns over the last few months and may actually be approaching a breakup point.

Collaborative Investment

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Collaborative Investment Series has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Collaborative Investment is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Bank of America and Collaborative Investment

The main advantage of trading using opposite Bank of America and Collaborative Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Collaborative 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 Collaborative Investment will offset losses from the drop in Collaborative Investment's long position.

The idea behind Bank of America and Collaborative Investment Series 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.