Correlation Between Bank of America and Perusahaan Perseroan
Can any of the company-specific risk be diversified away by investing in both Bank of America and Perusahaan Perseroan 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 Perusahaan Perseroan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and Perusahaan Perseroan PT, you can compare the effects of market volatilities on Bank of America and Perusahaan Perseroan 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 Perusahaan Perseroan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Perusahaan Perseroan.
Diversification Opportunities for Bank of America and Perusahaan Perseroan
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and Perusahaan is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Perusahaan Perseroan PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perusahaan Perseroan 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 Perusahaan Perseroan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perusahaan Perseroan has no effect on the direction of Bank of America i.e., Bank of America and Perusahaan Perseroan go up and down completely randomly.
Pair Corralation between Bank of America and Perusahaan Perseroan
Assuming the 90 days horizon Verizon Communications is expected to generate 0.73 times more return on investment than Perusahaan Perseroan. However, Verizon Communications is 1.38 times less risky than Perusahaan Perseroan. It trades about 0.09 of its potential returns per unit of risk. Perusahaan Perseroan PT is currently generating about -0.04 per unit of risk. If you would invest 2,956 in Verizon Communications on August 29, 2024 and sell it today you would earn a total of 1,270 from holding Verizon Communications or generate 42.96% 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. Perusahaan Perseroan PT
Performance |
| Timeline |
| Verizon Communications |
| Perusahaan Perseroan |
Bank of America and Perusahaan Perseroan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Perusahaan Perseroan
The main advantage of trading using opposite Bank of America and Perusahaan Perseroan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Perusahaan Perseroan 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 Perusahaan Perseroan will offset losses from the drop in Perusahaan Perseroan's long position.| Bank of America vs. Entravision Communications | Bank of America vs. Citic Telecom International | Bank of America vs. AIR PRODCHEMICALS | Bank of America vs. Consolidated Communications Holdings |
| Perusahaan Perseroan vs. Verizon Communications | Perusahaan Perseroan vs. ATT Inc | Perusahaan Perseroan vs. ATT Inc | Perusahaan Perseroan vs. Deutsche Telekom AG |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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