Correlation Between Bank of America and TAT HONG
Can any of the company-specific risk be diversified away by investing in both Bank of America and TAT HONG 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 TAT HONG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and TAT HONG EQSRV, you can compare the effects of market volatilities on Bank of America and TAT HONG 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 TAT HONG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and TAT HONG.
Diversification Opportunities for Bank of America and TAT HONG
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and TAT is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and TAT HONG EQSRV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAT HONG EQSRV 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 Verizon Communications are associated (or correlated) with TAT HONG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAT HONG EQSRV has no effect on the direction of Bank of America i.e., Bank of America and TAT HONG go up and down completely randomly.
Pair Corralation between Bank of America and TAT HONG
Assuming the 90 days trading horizon Bank of America is expected to generate 3.45 times less return on investment than TAT HONG. But when comparing it to its historical volatility, Verizon Communications is 4.63 times less risky than TAT HONG. It trades about 0.12 of its potential returns per unit of risk. TAT HONG EQSRV is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 12.00 in TAT HONG EQSRV on August 30, 2024 and sell it today you would earn a total of 2.00 from holding TAT HONG EQSRV or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Verizon Communications vs. TAT HONG EQSRV
Performance |
| Timeline |
| Verizon Communications |
| TAT HONG EQSRV |
Bank of America and TAT HONG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and TAT HONG
The main advantage of trading using opposite Bank of America and TAT HONG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, TAT HONG 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 TAT HONG will offset losses from the drop in TAT HONG's long position.| Bank of America vs. Apple Inc | Bank of America vs. Apple Inc | Bank of America vs. Superior Plus Corp | Bank of America vs. SIVERS SEMICONDUCTORS AB |
| TAT HONG vs. Verizon Communications | TAT HONG vs. Spirent Communications plc | TAT HONG vs. Charter Communications | TAT HONG vs. Singapore Telecommunications Limited |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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