Correlation Between Rogers Communications and Bank of America

Can any of the company-specific risk be diversified away by investing in both Rogers Communications and Bank of America 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 Rogers Communications and Bank of America into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rogers Communications and Verizon Communications, you can compare the effects of market volatilities on Rogers Communications and Bank of America 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 Rogers Communications with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rogers Communications and Bank of America.

Diversification Opportunities for Rogers Communications and Bank of America

-0.27

Correlation Coefficient

Rogers Communications  Bank of America

Very good diversification

The 3 months correlation between Rogers and Bank is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Rogers Communications and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and Rogers Communications 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 Rogers Communications are associated (or correlated) with Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of Rogers Communications i.e., Rogers Communications and Bank of America go up and down completely randomly.

Pair Corralation between Rogers Communications and Bank of America

Assuming the 90 days trading horizon Rogers Communications is expected to under-perform the Bank of America. But the stock apears to be less risky and, when comparing its historical volatility, Rogers Communications is 1.11 times less risky than Bank of America. The stock trades about -0.08 of its potential returns per unit of risk. The Verizon Communications is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,818  in Verizon Communications on September 3, 2024 and sell it today you would earn a total of  357.00  from holding Verizon Communications or generate 9.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Rogers Communications  vs.  Verizon Communications

Rogers Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rogers Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Verizon Communications

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Verizon Communications are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, Bank of America may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Rogers Communications and Bank of America

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

The idea behind Rogers Communications and Verizon Communications 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 the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.