Correlation Between Loews Corp and Bank of America
Can any of the company-specific risk be diversified away by investing in both Loews Corp 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 Loews Corp 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 Loews Corp and Bank of America, you can compare the effects of market volatilities on Loews Corp 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 Loews Corp with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loews Corp and Bank of America.
Diversification Opportunities for Loews Corp and Bank of America
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Loews and Bank is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Loews Corp and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of America and Loews Corp 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 Loews Corp 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 Bank of America has no effect on the direction of Loews Corp i.e., Loews Corp and Bank of America go up and down completely randomly.
Pair Corralation between Loews Corp and Bank of America
Taking into account the 90-day investment horizon Loews Corp is expected to under-perform the Bank of America. But the stock apears to be less risky and, when comparing its historical volatility, Loews Corp is 1.76 times less risky than Bank of America. The stock trades about 0.0 of its potential returns per unit of risk. The Bank of America is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,709 in Bank of America on January 26, 2024 and sell it today you would earn a total of 123.00 from holding Bank of America or generate 3.32% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Loews Corp vs. Bank of America
Performance |
Timeline |
Loews Corp |
Bank of America |
Loews Corp and Bank of America Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Loews Corp and Bank of America
The main advantage of trading using opposite Loews Corp and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loews Corp 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.Loews Corp vs. Horace Mann Educators | Loews Corp vs. Global Indemnity PLC | Loews Corp vs. Selective Insurance Group | Loews Corp vs. Kemper |
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 |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
AI Investment Finder Use AI to screen and filter profitable investment opportunities | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
Content Syndication Quickly integrate customizable finance content to your own investment portal |