Correlation Between Bank of America and MOWI ASA
Can any of the company-specific risk be diversified away by investing in both Bank of America and MOWI ASA 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 MOWI ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and MOWI ASA SPADR, you can compare the effects of market volatilities on Bank of America and MOWI ASA 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 MOWI ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and MOWI ASA.
Diversification Opportunities for Bank of America and MOWI ASA
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and MOWI is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and MOWI ASA SPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOWI ASA SPADR 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 MOWI ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOWI ASA SPADR has no effect on the direction of Bank of America i.e., Bank of America and MOWI ASA go up and down completely randomly.
Pair Corralation between Bank of America and MOWI ASA
Assuming the 90 days trading horizon Verizon Communications is expected to generate 0.82 times more return on investment than MOWI ASA. However, Verizon Communications is 1.21 times less risky than MOWI ASA. It trades about 0.05 of its potential returns per unit of risk. MOWI ASA SPADR is currently generating about 0.03 per unit of risk. If you would invest 3,073 in Verizon Communications on September 12, 2024 and sell it today you would earn a total of 943.00 from holding Verizon Communications or generate 30.69% 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. MOWI ASA SPADR
Performance |
| Timeline |
| Verizon Communications |
| MOWI ASA SPADR |
Bank of America and MOWI ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and MOWI ASA
The main advantage of trading using opposite Bank of America and MOWI ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, MOWI ASA 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 MOWI ASA will offset losses from the drop in MOWI ASA'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 |
| MOWI ASA vs. Taylor Morrison Home | MOWI ASA vs. Universal Display | MOWI ASA vs. Verizon Communications | MOWI ASA vs. Spirent Communications plc |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |