Correlation Between Bank of America and G III
Can any of the company-specific risk be diversified away by investing in both Bank of America and G III 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 G III into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and G III Apparel Group, you can compare the effects of market volatilities on Bank of America and G III 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 G III. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and G III.
Diversification Opportunities for Bank of America and G III
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and GI4 is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and G III Apparel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G III Apparel 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 G III. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G III Apparel has no effect on the direction of Bank of America i.e., Bank of America and G III go up and down completely randomly.
Pair Corralation between Bank of America and G III
Assuming the 90 days trading horizon Verizon Communications is expected to generate 1.28 times more return on investment than G III. However, Bank of America is 1.28 times more volatile than G III Apparel Group. It trades about 0.04 of its potential returns per unit of risk. G III Apparel Group is currently generating about -0.38 per unit of risk. If you would invest 3,865 in Verizon Communications on December 12, 2024 and sell it today you would earn a total of 52.00 from holding Verizon Communications or generate 1.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. G III Apparel Group
Performance |
| Timeline |
| Verizon Communications |
| G III Apparel |
Bank of America and G III Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and G III
The main advantage of trading using opposite Bank of America and G III positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, G III 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 G III will offset losses from the drop in G III's long position.| Bank of America vs. Caseys General Stores | ||
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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