Correlation Between Bank of America and OPEN HOUSE
Can any of the company-specific risk be diversified away by investing in both Bank of America and OPEN HOUSE 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 OPEN HOUSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and OPEN HOUSE GROUP, you can compare the effects of market volatilities on Bank of America and OPEN HOUSE 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 OPEN HOUSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and OPEN HOUSE.
Diversification Opportunities for Bank of America and OPEN HOUSE
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and OPEN is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and OPEN HOUSE GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPEN HOUSE GROUP 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 OPEN HOUSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPEN HOUSE GROUP has no effect on the direction of Bank of America i.e., Bank of America and OPEN HOUSE go up and down completely randomly.
Pair Corralation between Bank of America and OPEN HOUSE
Assuming the 90 days trading horizon Verizon Communications is expected to generate 0.64 times more return on investment than OPEN HOUSE. However, Verizon Communications is 1.56 times less risky than OPEN HOUSE. It trades about 0.26 of its potential returns per unit of risk. OPEN HOUSE GROUP is currently generating about 0.09 per unit of risk. If you would invest 3,862 in Verizon Communications on August 26, 2024 and sell it today you would earn a total of 286.00 from holding Verizon Communications or generate 7.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. OPEN HOUSE GROUP
Performance |
| Timeline |
| Verizon Communications |
| OPEN HOUSE GROUP |
Bank of America and OPEN HOUSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and OPEN HOUSE
The main advantage of trading using opposite Bank of America and OPEN HOUSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, OPEN HOUSE 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 OPEN HOUSE will offset losses from the drop in OPEN HOUSE'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 |
| OPEN HOUSE vs. BW OFFSHORE LTD | OPEN HOUSE vs. Iridium Communications | OPEN HOUSE vs. BJs Restaurants | OPEN HOUSE vs. Verizon Communications |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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