Correlation Between Bank of America and PARKEN Sport
Can any of the company-specific risk be diversified away by investing in both Bank of America and PARKEN Sport 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 PARKEN Sport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and PARKEN Sport Entertainment, you can compare the effects of market volatilities on Bank of America and PARKEN Sport 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 PARKEN Sport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and PARKEN Sport.
Diversification Opportunities for Bank of America and PARKEN Sport
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and PARKEN is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and PARKEN Sport Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARKEN Sport Enterta 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 PARKEN Sport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARKEN Sport Enterta has no effect on the direction of Bank of America i.e., Bank of America and PARKEN Sport go up and down completely randomly.
Pair Corralation between Bank of America and PARKEN Sport
Assuming the 90 days trading horizon Verizon Communications is expected to generate 1.02 times more return on investment than PARKEN Sport. However, Bank of America is 1.02 times more volatile than PARKEN Sport Entertainment. It trades about 0.31 of its potential returns per unit of risk. PARKEN Sport Entertainment is currently generating about 0.02 per unit of risk. If you would invest 3,860 in Verizon Communications on November 27, 2024 and sell it today you would earn a total of 260.00 from holding Verizon Communications or generate 6.74% 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. PARKEN Sport Entertainment
Performance |
| Timeline |
| Verizon Communications |
| PARKEN Sport Enterta |
Bank of America and PARKEN Sport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and PARKEN Sport
The main advantage of trading using opposite Bank of America and PARKEN Sport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, PARKEN Sport 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 PARKEN Sport will offset losses from the drop in PARKEN Sport's long position.| Bank of America vs. Collins Foods Limited | Bank of America vs. Perdoceo Education | Bank of America vs. China Modern Dairy | Bank of America vs. Waste Management |
| PARKEN Sport vs. Stewart Information Services | PARKEN Sport vs. ALERION CLEANPOWER | PARKEN Sport vs. NTT DATA | PARKEN Sport vs. Clean Harbors |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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