Correlation Between Bank of America and Granite Construction
Can any of the company-specific risk be diversified away by investing in both Bank of America and Granite Construction 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 Granite Construction 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 Granite Construction Incorporated, you can compare the effects of market volatilities on Bank of America and Granite Construction 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 Granite Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Granite Construction.
Diversification Opportunities for Bank of America and Granite Construction
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Granite is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Granite Construction Incorpora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction 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 Granite Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Construction has no effect on the direction of Bank of America i.e., Bank of America and Granite Construction go up and down completely randomly.
Pair Corralation between Bank of America and Granite Construction
Considering the 90-day investment horizon Bank of America is expected to generate 0.84 times more return on investment than Granite Construction. However, Bank of America is 1.2 times less risky than Granite Construction. It trades about -0.01 of its potential returns per unit of risk. Granite Construction Incorporated is currently generating about -0.19 per unit of risk. If you would invest 4,678 in Bank of America on December 1, 2024 and sell it today you would lose (68.00) from holding Bank of America or give up 1.45% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Bank of America vs. Granite Construction Incorpora
Performance |
Timeline |
Bank of America |
Granite Construction |
Bank of America and Granite Construction Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of America and Granite Construction
The main advantage of trading using opposite Bank of America and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Granite Construction 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 Granite Construction will offset losses from the drop in Granite Construction's long position.Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
Granite Construction vs. EMCOR Group | Granite Construction vs. Comfort Systems USA | Granite Construction vs. Primoris Services | Granite Construction vs. Construction Partners |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |