Correlation Between Bank of America and TYSNES SPAREBANK
Can any of the company-specific risk be diversified away by investing in both Bank of America and TYSNES SPAREBANK 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 TYSNES SPAREBANK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and TYSNES SPAREBANK NK, you can compare the effects of market volatilities on Bank of America and TYSNES SPAREBANK 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 TYSNES SPAREBANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and TYSNES SPAREBANK.
Diversification Opportunities for Bank of America and TYSNES SPAREBANK
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and TYSNES is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and TYSNES SPAREBANK NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TYSNES SPAREBANK 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 TYSNES SPAREBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TYSNES SPAREBANK has no effect on the direction of Bank of America i.e., Bank of America and TYSNES SPAREBANK go up and down completely randomly.
Pair Corralation between Bank of America and TYSNES SPAREBANK
Assuming the 90 days trading horizon Bank of America is expected to generate 7.93 times less return on investment than TYSNES SPAREBANK. But when comparing it to its historical volatility, Verizon Communications is 6.9 times less risky than TYSNES SPAREBANK. It trades about 0.04 of its potential returns per unit of risk. TYSNES SPAREBANK NK is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 429.00 in TYSNES SPAREBANK NK on September 13, 2024 and sell it today you would earn a total of 548.00 from holding TYSNES SPAREBANK NK or generate 127.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. TYSNES SPAREBANK NK
Performance |
| Timeline |
| Verizon Communications |
| TYSNES SPAREBANK |
Bank of America and TYSNES SPAREBANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and TYSNES SPAREBANK
The main advantage of trading using opposite Bank of America and TYSNES SPAREBANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, TYSNES SPAREBANK 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 TYSNES SPAREBANK will offset losses from the drop in TYSNES SPAREBANK'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 |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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