Correlation Between Bank of America and Ecotel Communication
Can any of the company-specific risk be diversified away by investing in both Bank of America and Ecotel Communication 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 Ecotel Communication into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and ecotel communication ag, you can compare the effects of market volatilities on Bank of America and Ecotel Communication 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 Ecotel Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Ecotel Communication.
Diversification Opportunities for Bank of America and Ecotel Communication
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bank and Ecotel is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and ecotel communication ag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ecotel communication 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 Ecotel Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ecotel communication has no effect on the direction of Bank of America i.e., Bank of America and Ecotel Communication go up and down completely randomly.
Pair Corralation between Bank of America and Ecotel Communication
Assuming the 90 days trading horizon Verizon Communications is expected to under-perform the Ecotel Communication. But the stock apears to be less risky and, when comparing its historical volatility, Verizon Communications is 1.2 times less risky than Ecotel Communication. The stock trades about -0.04 of its potential returns per unit of risk. The ecotel communication ag is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,360 in ecotel communication ag on November 4, 2024 and sell it today you would earn a total of 45.00 from holding ecotel communication ag or generate 3.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. ecotel communication ag
Performance |
| Timeline |
| Verizon Communications |
| ecotel communication |
Bank of America and Ecotel Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Ecotel Communication
The main advantage of trading using opposite Bank of America and Ecotel Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Ecotel Communication 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 Ecotel Communication will offset losses from the drop in Ecotel Communication's long position.| Bank of America vs. US Physical Therapy | Bank of America vs. RCI Hospitality Holdings | Bank of America vs. InterContinental Hotels Group | Bank of America vs. WESANA HEALTH HOLD |
| Ecotel Communication vs. Grupo Carso SAB | Ecotel Communication vs. MPH Health Care | Ecotel Communication vs. OPKO HEALTH | Ecotel Communication vs. SHIP HEALTHCARE HLDGINC |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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