Correlation Between KRISPY KREME and Bank of America
Can any of the company-specific risk be diversified away by investing in both KRISPY KREME 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 KRISPY KREME 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 KRISPY KREME DL 01 and Verizon Communications, you can compare the effects of market volatilities on KRISPY KREME 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 KRISPY KREME with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRISPY KREME and Bank of America.
Diversification Opportunities for KRISPY KREME and Bank of America
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between KRISPY and Bank is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding KRISPY KREME DL 01 and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and KRISPY KREME 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 KRISPY KREME DL 01 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 KRISPY KREME i.e., KRISPY KREME and Bank of America go up and down completely randomly.
Pair Corralation between KRISPY KREME and Bank of America
Assuming the 90 days horizon KRISPY KREME is expected to generate 28.48 times less return on investment than Bank of America. In addition to that, KRISPY KREME is 2.74 times more volatile than Verizon Communications. It trades about 0.0 of its total potential returns per unit of risk. Verizon Communications is currently generating about 0.37 per unit of volatility. If you would invest 3,803 in Verizon Communications on August 31, 2024 and sell it today you would earn a total of 406.00 from holding Verizon Communications or generate 10.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KRISPY KREME DL 01 vs. Verizon Communications
Performance |
| Timeline |
| KRISPY KREME DL |
| Verizon Communications |
KRISPY KREME and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KRISPY KREME and Bank of America
The main advantage of trading using opposite KRISPY KREME and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KRISPY KREME 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.| KRISPY KREME vs. Highlight Communications AG | KRISPY KREME vs. Playtech plc | KRISPY KREME vs. PLAYSTUDIOS A DL 0001 | KRISPY KREME vs. LG Display Co |
| Bank of America vs. SIVERS SEMICONDUCTORS AB | Bank of America vs. Darden Restaurants | Bank of America vs. Reliance Steel Aluminum | Bank of America vs. Q2M Managementberatung AG |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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