Correlation Between Bank of America and ITALIAN WINE
Can any of the company-specific risk be diversified away by investing in both Bank of America and ITALIAN WINE 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 ITALIAN WINE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and ITALIAN WINE BRANDS, you can compare the effects of market volatilities on Bank of America and ITALIAN WINE 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 ITALIAN WINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and ITALIAN WINE.
Diversification Opportunities for Bank of America and ITALIAN WINE
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and ITALIAN is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and ITALIAN WINE BRANDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITALIAN WINE BRANDS 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 ITALIAN WINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITALIAN WINE BRANDS has no effect on the direction of Bank of America i.e., Bank of America and ITALIAN WINE go up and down completely randomly.
Pair Corralation between Bank of America and ITALIAN WINE
Assuming the 90 days trading horizon Verizon Communications is expected to generate 0.76 times more return on investment than ITALIAN WINE. However, Verizon Communications is 1.32 times less risky than ITALIAN WINE. It trades about 0.07 of its potential returns per unit of risk. ITALIAN WINE BRANDS is currently generating about 0.02 per unit of risk. If you would invest 2,938 in Verizon Communications on September 1, 2024 and sell it today you would earn a total of 1,237 from holding Verizon Communications or generate 42.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. ITALIAN WINE BRANDS
Performance |
| Timeline |
| Verizon Communications |
| ITALIAN WINE BRANDS |
Bank of America and ITALIAN WINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and ITALIAN WINE
The main advantage of trading using opposite Bank of America and ITALIAN WINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, ITALIAN WINE 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 ITALIAN WINE will offset losses from the drop in ITALIAN WINE's long position.| Bank of America vs. Regions Financial | Bank of America vs. Shin Etsu Chemical Co | Bank of America vs. Sumitomo Chemical | Bank of America vs. CHEMICAL INDUSTRIES |
| ITALIAN WINE vs. RETAIL FOOD GROUP | ITALIAN WINE vs. Pick n Pay | ITALIAN WINE vs. The Trade Desk | ITALIAN WINE vs. FLOW TRADERS LTD |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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