Correlation Between Bank of America and Singapore Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Bank of America and Singapore Telecommunicatio 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 Singapore Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and Singapore Telecommunications Limited, you can compare the effects of market volatilities on Bank of America and Singapore Telecommunicatio 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 Singapore Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Singapore Telecommunicatio.
Diversification Opportunities for Bank of America and Singapore Telecommunicatio
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Singapore is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Singapore Telecommunications L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio 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 Singapore Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Telecommunicatio has no effect on the direction of Bank of America i.e., Bank of America and Singapore Telecommunicatio go up and down completely randomly.
Pair Corralation between Bank of America and Singapore Telecommunicatio
Assuming the 90 days horizon Verizon Communications is expected to generate 0.78 times more return on investment than Singapore Telecommunicatio. However, Verizon Communications is 1.28 times less risky than Singapore Telecommunicatio. It trades about 0.2 of its potential returns per unit of risk. Singapore Telecommunications Limited is currently generating about 0.06 per unit of risk. If you would invest 3,927 in Verizon Communications on August 24, 2024 and sell it today you would earn a total of 229.00 from holding Verizon Communications or generate 5.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Verizon Communications vs. Singapore Telecommunications L
Performance |
| Timeline |
| Verizon Communications |
| Singapore Telecommunicatio |
Bank of America and Singapore Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Singapore Telecommunicatio
The main advantage of trading using opposite Bank of America and Singapore Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Singapore Telecommunicatio 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 Singapore Telecommunicatio will offset losses from the drop in Singapore Telecommunicatio's long position.| Bank of America vs. T Mobile | Bank of America vs. ATT Inc | Bank of America vs. Deutsche Telekom AG | Bank of America vs. Nippon Telegraph and |
| Singapore Telecommunicatio vs. T Mobile | Singapore Telecommunicatio vs. ATT Inc | Singapore Telecommunicatio vs. Deutsche Telekom AG | Singapore Telecommunicatio vs. Nippon Telegraph and |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |