Correlation Between Amazon CDR and Bank of America
Can any of the company-specific risk be diversified away by investing in both Amazon CDR 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 Amazon CDR 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 Amazon CDR and Bank of America, you can compare the effects of market volatilities on Amazon CDR 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 Amazon CDR with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Bank of America.
Diversification Opportunities for Amazon CDR and Bank of America
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Amazon and Bank is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR 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 Amazon CDR 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 Amazon CDR 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 Amazon CDR i.e., Amazon CDR and Bank of America go up and down completely randomly.
Pair Corralation between Amazon CDR and Bank of America
Assuming the 90 days trading horizon Amazon CDR is expected to generate 2.0 times less return on investment than Bank of America. In addition to that, Amazon CDR is 1.15 times more volatile than Bank of America. It trades about 0.05 of its total potential returns per unit of risk. Bank of America is currently generating about 0.12 per unit of volatility. If you would invest 1,829 in Bank of America on August 29, 2024 and sell it today you would earn a total of 659.00 from holding Bank of America or generate 36.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon CDR vs. Bank of America
Performance |
| Timeline |
| Amazon CDR |
| Bank of America |
Amazon CDR and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon CDR and Bank of America
The main advantage of trading using opposite Amazon CDR and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR 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.| Amazon CDR vs. Eros Resources Corp | Amazon CDR vs. Apple Inc CDR | Amazon CDR vs. European Residential Real | Amazon CDR vs. Canadian Utilities Ltd |
| Bank of America vs. Microsoft Corp CDR | Bank of America vs. Apple Inc CDR | Bank of America vs. Alphabet Inc CDR | Bank of America vs. Amazon CDR |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |