Correlation Between Bank of America and Grupo Sports
Can any of the company-specific risk be diversified away by investing in both Bank of America and Grupo Sports 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 Grupo Sports 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 Grupo Sports World, you can compare the effects of market volatilities on Bank of America and Grupo Sports 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 Grupo Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Grupo Sports.
Diversification Opportunities for Bank of America and Grupo Sports
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Grupo is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Grupo Sports World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Sports World 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 Grupo Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Sports World has no effect on the direction of Bank of America i.e., Bank of America and Grupo Sports go up and down completely randomly.
Pair Corralation between Bank of America and Grupo Sports
Assuming the 90 days trading horizon Bank of America is expected to generate 1.14 times more return on investment than Grupo Sports. However, Bank of America is 1.14 times more volatile than Grupo Sports World. It trades about -0.05 of its potential returns per unit of risk. Grupo Sports World is currently generating about -0.06 per unit of risk. If you would invest 93,878 in Bank of America on September 13, 2024 and sell it today you would lose (1,578) from holding Bank of America or give up 1.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Grupo Sports World
Performance |
| Timeline |
| Bank of America |
| Grupo Sports World |
Bank of America and Grupo Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Grupo Sports
The main advantage of trading using opposite Bank of America and Grupo Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Grupo Sports 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 Grupo Sports will offset losses from the drop in Grupo Sports' long position.| Bank of America vs. JPMorgan Chase Co | Bank of America vs. Citigroup | Bank of America vs. The Select Sector | Bank of America vs. Promotora y Operadora |
| Grupo Sports vs. United States Steel | Grupo Sports vs. Verizon Communications | Grupo Sports vs. Southwest Airlines | Grupo Sports vs. Deutsche Bank Aktiengesellschaft |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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