Correlation Between Bank of America and Citadel Income

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

Diversification Opportunities for Bank of America and Citadel Income

0.71

Correlation Coefficient

Bank of America  Citadel Income

Poor diversification

The 3 months correlation between Bank and Citadel is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Citadel Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citadel Income 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 Citadel Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citadel Income has no effect on the direction of Bank of America i.e., Bank of America and Citadel Income go up and down completely randomly.

Pair Corralation between Bank of America and Citadel Income

Considering the 90-day investment horizon Bank of America is expected to generate 0.59 times more return on investment than Citadel Income. However, Bank of America is 1.7 times less risky than Citadel Income. It trades about 0.28 of its potential returns per unit of risk. Citadel Income is currently generating about 0.1 per unit of risk. If you would invest  3,935  in Bank of America on April 24, 2025 and sell it today you would earn a total of  879.00  from holding Bank of America or generate 22.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.16%
Values	Daily Returns

Bank of America  vs.  Citadel Income

Bank of America

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of America are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Bank of America exhibited solid returns over the last few months and may actually be approaching a breakup point.

Citadel Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citadel Income are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak technical and fundamental indicators, Citadel Income may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Bank of America and Citadel Income

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

The idea behind Bank of America and Citadel Income 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.