Correlation Between Bank of America and Union De
Can any of the company-specific risk be diversified away by investing in both Bank of America and Union De 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 Union De into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and Union De Cervecerias, you can compare the effects of market volatilities on Bank of America and Union De 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 Union De. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Union De.
Diversification Opportunities for Bank of America and Union De
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Union is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Union De Cervecerias in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union De Cervecerias 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 Bank of America are associated (or correlated) with Union De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union De Cervecerias has no effect on the direction of Bank of America i.e., Bank of America and Union De go up and down completely randomly.
Pair Corralation between Bank of America and Union De
If you would invest (100.00) in Union De Cervecerias on October 7, 2024 and sell it today you would earn a total of 100.00 from holding Union De Cervecerias or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Bank of America vs. Union De Cervecerias
Performance |
| Timeline |
| Bank of America |
| Union De Cervecerias |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank of America and Union De Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Union De
The main advantage of trading using opposite Bank of America and Union De positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Union De 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 Union De will offset losses from the drop in Union De's long position.The idea behind Bank of America and Union De Cervecerias pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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