Correlation Between Bank of America and Odyssey Marine
Can any of the company-specific risk be diversified away by investing in both Bank of America and Odyssey Marine 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 Odyssey Marine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and Odyssey Marine Exploration, you can compare the effects of market volatilities on Bank of America and Odyssey Marine 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 Odyssey Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Odyssey Marine.
Diversification Opportunities for Bank of America and Odyssey Marine
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Odyssey is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Odyssey Marine Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odyssey Marine Explo 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 Odyssey Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odyssey Marine Explo has no effect on the direction of Bank of America i.e., Bank of America and Odyssey Marine go up and down completely randomly.
Pair Corralation between Bank of America and Odyssey Marine
Assuming the 90 days trading horizon Verizon Communications is expected to generate 0.17 times more return on investment than Odyssey Marine. However, Verizon Communications is 5.73 times less risky than Odyssey Marine. It trades about 0.35 of its potential returns per unit of risk. Odyssey Marine Exploration is currently generating about -0.24 per unit of risk. If you would invest 3,831 in Verizon Communications on August 30, 2024 and sell it today you would earn a total of 397.00 from holding Verizon Communications or generate 10.36% 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. Odyssey Marine Exploration
Performance |
| Timeline |
| Verizon Communications |
| Odyssey Marine Explo |
Bank of America and Odyssey Marine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Odyssey Marine
The main advantage of trading using opposite Bank of America and Odyssey Marine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Odyssey Marine 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 Odyssey Marine will offset losses from the drop in Odyssey Marine's long position.| Bank of America vs. PKSHA TECHNOLOGY INC | Bank of America vs. Playtech plc | Bank of America vs. Axcelis Technologies | Bank of America vs. Nordic Semiconductor ASA |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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