Correlation Between Bank of America and KYUSHU EL
Can any of the company-specific risk be diversified away by investing in both Bank of America and KYUSHU EL 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 KYUSHU EL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and KYUSHU EL PWR, you can compare the effects of market volatilities on Bank of America and KYUSHU EL 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 KYUSHU EL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and KYUSHU EL.
Diversification Opportunities for Bank of America and KYUSHU EL
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and KYUSHU is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and KYUSHU EL PWR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KYUSHU EL PWR 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 KYUSHU EL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KYUSHU EL PWR has no effect on the direction of Bank of America i.e., Bank of America and KYUSHU EL go up and down completely randomly.
Pair Corralation between Bank of America and KYUSHU EL
Assuming the 90 days trading horizon Bank of America is expected to generate 2.33 times less return on investment than KYUSHU EL. But when comparing it to its historical volatility, Verizon Communications is 1.59 times less risky than KYUSHU EL. It trades about 0.04 of its potential returns per unit of risk. KYUSHU EL PWR is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 498.00 in KYUSHU EL PWR on September 16, 2024 and sell it today you would earn a total of 367.00 from holding KYUSHU EL PWR or generate 73.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. KYUSHU EL PWR
Performance |
| Timeline |
| Verizon Communications |
| KYUSHU EL PWR |
Bank of America and KYUSHU EL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and KYUSHU EL
The main advantage of trading using opposite Bank of America and KYUSHU EL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, KYUSHU EL 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 KYUSHU EL will offset losses from the drop in KYUSHU EL's long position.| Bank of America vs. Apple Inc | Bank of America vs. Apple Inc | Bank of America vs. Apple Inc | Bank of America vs. Apple Inc |
| KYUSHU EL vs. Alaska Air Group | KYUSHU EL vs. Verizon Communications | KYUSHU EL vs. Charter Communications | KYUSHU EL 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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