Correlation Between Bank of America and Aerospace
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By analyzing existing cross correlation between Bank of America and Aerospace Hi Tech Holding, you can compare the effects of market volatilities on Bank of America and Aerospace 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 Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Aerospace.
Diversification Opportunities for Bank of America and Aerospace
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Aerospace is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Aerospace Hi Tech Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerospace Hi Tech 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 Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerospace Hi Tech has no effect on the direction of Bank of America i.e., Bank of America and Aerospace go up and down completely randomly.
Pair Corralation between Bank of America and Aerospace
Considering the 90-day investment horizon Bank of America is expected to generate 2.32 times less return on investment than Aerospace. But when comparing it to its historical volatility, Bank of America is 2.58 times less risky than Aerospace. It trades about 0.1 of its potential returns per unit of risk. Aerospace Hi Tech Holding is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 838.00 in Aerospace Hi Tech Holding on September 3, 2024 and sell it today you would earn a total of 355.00 from holding Aerospace Hi Tech Holding or generate 42.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.8% |
| Values | Daily Returns |
Bank of America vs. Aerospace Hi Tech Holding
Performance |
| Timeline |
| Bank of America |
| Aerospace Hi Tech |
Bank of America and Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Aerospace
The main advantage of trading using opposite Bank of America and Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Aerospace 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 Aerospace will offset losses from the drop in Aerospace's long position.| Bank of America vs. Partner Communications | Bank of America vs. Merck Company | Bank of America vs. Western Midstream Partners | Bank of America vs. Edgewise Therapeutics |
| Aerospace vs. PetroChina Co Ltd | Aerospace vs. China Mobile Limited | Aerospace vs. Industrial and Commercial | Aerospace vs. China Life Insurance |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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