Correlation Between Bank of America and Expeditors International
Can any of the company-specific risk be diversified away by investing in both Bank of America and Expeditors International 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 Expeditors International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and Expeditors International of, you can compare the effects of market volatilities on Bank of America and Expeditors International 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 Expeditors International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Expeditors International.
Diversification Opportunities for Bank of America and Expeditors International
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Expeditors is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Expeditors International of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expeditors International 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 Expeditors International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expeditors International has no effect on the direction of Bank of America i.e., Bank of America and Expeditors International go up and down completely randomly.
Pair Corralation between Bank of America and Expeditors International
Assuming the 90 days trading horizon Verizon Communications is expected to generate 0.96 times more return on investment than Expeditors International. However, Verizon Communications is 1.04 times less risky than Expeditors International. It trades about 0.08 of its potential returns per unit of risk. Expeditors International of is currently generating about 0.01 per unit of risk. If you would invest 3,543 in Verizon Communications on September 14, 2024 and sell it today you would earn a total of 463.00 from holding Verizon Communications or generate 13.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. Expeditors International of
Performance |
| Timeline |
| Verizon Communications |
| Expeditors International |
Bank of America and Expeditors International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Expeditors International
The main advantage of trading using opposite Bank of America and Expeditors International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Expeditors International 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 Expeditors International will offset losses from the drop in Expeditors International'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 |
| Expeditors International vs. AUSTEVOLL SEAFOOD | Expeditors International vs. THORNEY TECHS LTD | Expeditors International vs. Associated British Foods | Expeditors International vs. ASSOC BR FOODS |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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