Correlation Between Bank of America and CITIC Telecom
Can any of the company-specific risk be diversified away by investing in both Bank of America and CITIC Telecom 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 CITIC Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and CITIC Telecom International, you can compare the effects of market volatilities on Bank of America and CITIC Telecom 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 CITIC Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and CITIC Telecom.
Diversification Opportunities for Bank of America and CITIC Telecom
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bank and CITIC is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and CITIC Telecom International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Telecom Intern 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 CITIC Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Telecom Intern has no effect on the direction of Bank of America i.e., Bank of America and CITIC Telecom go up and down completely randomly.
Pair Corralation between Bank of America and CITIC Telecom
Assuming the 90 days trading horizon Verizon Communications is expected to under-perform the CITIC Telecom. But the stock apears to be less risky and, when comparing its historical volatility, Verizon Communications is 2.66 times less risky than CITIC Telecom. The stock trades about -0.03 of its potential returns per unit of risk. The CITIC Telecom International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 25.00 in CITIC Telecom International on September 25, 2024 and sell it today you would earn a total of 2.00 from holding CITIC Telecom International or generate 8.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Verizon Communications vs. CITIC Telecom International
Performance |
Timeline |
Verizon Communications |
CITIC Telecom Intern |
Bank of America and CITIC Telecom Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of America and CITIC Telecom
The main advantage of trading using opposite Bank of America and CITIC Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, CITIC Telecom 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 CITIC Telecom will offset losses from the drop in CITIC Telecom's long position.Bank of America vs. Apple Inc | Bank of America vs. Apple Inc | Bank of America vs. Apple Inc | Bank of America vs. Microsoft |
CITIC Telecom vs. Bumrungrad Hospital Public | CITIC Telecom vs. Vulcan Materials | CITIC Telecom vs. DiamondRock Hospitality | CITIC Telecom vs. The Yokohama Rubber |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |