Correlation Between Bank of America and KONTIGO CARE
Can any of the company-specific risk be diversified away by investing in both Bank of America and KONTIGO CARE 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 KONTIGO CARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and KONTIGO CARE AB, you can compare the effects of market volatilities on Bank of America and KONTIGO CARE 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 KONTIGO CARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and KONTIGO CARE.
Diversification Opportunities for Bank of America and KONTIGO CARE
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and KONTIGO is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and KONTIGO CARE AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KONTIGO CARE AB 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 KONTIGO CARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KONTIGO CARE AB has no effect on the direction of Bank of America i.e., Bank of America and KONTIGO CARE go up and down completely randomly.
Pair Corralation between Bank of America and KONTIGO CARE
Assuming the 90 days trading horizon Bank of America is expected to generate 10.36 times less return on investment than KONTIGO CARE. But when comparing it to its historical volatility, Verizon Communications is 7.38 times less risky than KONTIGO CARE. It trades about 0.05 of its potential returns per unit of risk. KONTIGO CARE AB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 17.00 in KONTIGO CARE AB on September 12, 2024 and sell it today you would earn a total of 3.00 from holding KONTIGO CARE AB or generate 17.65% 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. KONTIGO CARE AB
Performance |
| Timeline |
| Verizon Communications |
| KONTIGO CARE AB |
Bank of America and KONTIGO CARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and KONTIGO CARE
The main advantage of trading using opposite Bank of America and KONTIGO CARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, KONTIGO CARE 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 KONTIGO CARE will offset losses from the drop in KONTIGO CARE's long position.| Bank of America vs. DEVRY EDUCATION GRP | Bank of America vs. Air Transport Services | Bank of America vs. American Public Education | Bank of America vs. Gold Road Resources |
| KONTIGO CARE vs. BLUESCOPE STEEL | KONTIGO CARE vs. Strategic Education | KONTIGO CARE vs. CHINA EDUCATION GROUP | KONTIGO CARE vs. Caltagirone SpA |
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.
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