Correlation Between Bank of America and ATLAND SA
Can any of the company-specific risk be diversified away by investing in both Bank of America and ATLAND SA 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 ATLAND SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and ATLAND SA INH, you can compare the effects of market volatilities on Bank of America and ATLAND SA 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 ATLAND SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and ATLAND SA.
Diversification Opportunities for Bank of America and ATLAND SA
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and ATLAND is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and ATLAND SA INH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATLAND SA INH 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 ATLAND SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATLAND SA INH has no effect on the direction of Bank of America i.e., Bank of America and ATLAND SA go up and down completely randomly.
Pair Corralation between Bank of America and ATLAND SA
Assuming the 90 days trading horizon Verizon Communications is expected to generate 1.02 times more return on investment than ATLAND SA. However, Bank of America is 1.02 times more volatile than ATLAND SA INH. It trades about 0.07 of its potential returns per unit of risk. ATLAND SA INH is currently generating about 0.05 per unit of risk. If you would invest 3,136 in Verizon Communications on September 14, 2024 and sell it today you would earn a total of 870.00 from holding Verizon Communications or generate 27.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.64% |
| Values | Daily Returns |
Verizon Communications vs. ATLAND SA INH
Performance |
| Timeline |
| Verizon Communications |
| ATLAND SA INH |
Bank of America and ATLAND SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and ATLAND SA
The main advantage of trading using opposite Bank of America and ATLAND SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, ATLAND SA 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 ATLAND SA will offset losses from the drop in ATLAND SA's long position.| Bank of America vs. Consolidated Communications Holdings | Bank of America vs. Transport International Holdings | Bank of America vs. TEXAS ROADHOUSE | Bank of America vs. WillScot Mobile Mini |
| ATLAND SA vs. Electronic Arts | ATLAND SA vs. Nucletron Electronic Aktiengesellschaft | ATLAND SA vs. PARKEN Sport Entertainment | ATLAND SA vs. TT Electronics 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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