Correlation Between Grand Canyon and Bank of America

Can any of the company-specific risk be diversified away by investing in both Grand Canyon 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 Grand Canyon 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 Grand Canyon Education and Verizon Communications, you can compare the effects of market volatilities on Grand Canyon 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 Grand Canyon with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Canyon and Bank of America.

Diversification Opportunities for Grand Canyon and Bank of America

0.01

Correlation Coefficient

Grand Canyon  Bank of America

Significant diversification

The 3 months correlation between Grand and Bank is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Grand Canyon Education and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and Grand Canyon 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 Grand Canyon Education 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 Grand Canyon i.e., Grand Canyon and Bank of America go up and down completely randomly.

Pair Corralation between Grand Canyon and Bank of America

Assuming the 90 days trading horizon Grand Canyon Education is expected to generate 1.8 times more return on investment than Bank of America. However, Grand Canyon is 1.8 times more volatile than Verizon Communications. It trades about -0.09 of its potential returns per unit of risk. Verizon Communications is currently generating about -0.3 per unit of risk. If you would invest  17,000  in Grand Canyon Education on March 25, 2025 and sell it today you would lose (600.00) from holding Grand Canyon Education or give up 3.53% of portfolio value over 90 days.

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

Grand Canyon Education  vs.  Verizon Communications

Grand Canyon Education

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grand Canyon Education are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Grand Canyon may actually be approaching a critical reversion point that can send shares even higher in July 2025.

Verizon Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Verizon Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Grand Canyon and Bank of America

The main advantage of trading using opposite Grand Canyon and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Canyon 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 Grand Canyon Education 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.