Correlation Between Bank of America and Playtech Plc
Can any of the company-specific risk be diversified away by investing in both Bank of America and Playtech Plc 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 Playtech Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and Playtech plc, you can compare the effects of market volatilities on Bank of America and Playtech Plc 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 Playtech Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Playtech Plc.
Diversification Opportunities for Bank of America and Playtech Plc
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Playtech is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Playtech plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtech plc 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 Playtech Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playtech plc has no effect on the direction of Bank of America i.e., Bank of America and Playtech Plc go up and down completely randomly.
Pair Corralation between Bank of America and Playtech Plc
Assuming the 90 days trading horizon Verizon Communications is expected to generate 1.33 times more return on investment than Playtech Plc. However, Bank of America is 1.33 times more volatile than Playtech plc. It trades about 0.36 of its potential returns per unit of risk. Playtech plc is currently generating about 0.03 per unit of risk. If you would invest 3,834 in Verizon Communications on September 2, 2024 and sell it today you would earn a total of 341.00 from holding Verizon Communications or generate 8.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. Playtech plc
Performance |
| Timeline |
| Verizon Communications |
| Playtech plc |
Bank of America and Playtech Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Playtech Plc
The main advantage of trading using opposite Bank of America and Playtech Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Playtech Plc 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 Playtech Plc will offset losses from the drop in Playtech Plc's long position.| Bank of America vs. SIVERS SEMICONDUCTORS AB | Bank of America vs. Darden Restaurants | Bank of America vs. Reliance Steel Aluminum | Bank of America vs. Q2M Managementberatung AG |
| Playtech Plc vs. Apple Inc | Playtech Plc vs. Apple Inc | Playtech Plc vs. Apple Inc | Playtech Plc vs. Apple Inc |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |