Correlation Between Bank of America and InfoBank
Can any of the company-specific risk be diversified away by investing in both Bank of America and InfoBank 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 InfoBank 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 InfoBank, you can compare the effects of market volatilities on Bank of America and InfoBank 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 InfoBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and InfoBank.
Diversification Opportunities for Bank of America and InfoBank
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and InfoBank is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and InfoBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InfoBank 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 InfoBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InfoBank has no effect on the direction of Bank of America i.e., Bank of America and InfoBank go up and down completely randomly.
Pair Corralation between Bank of America and InfoBank
Considering the 90-day investment horizon Bank of America is expected to generate 2.06 times less return on investment than InfoBank. But when comparing it to its historical volatility, Bank of America is 2.44 times less risky than InfoBank. It trades about 0.27 of its potential returns per unit of risk. InfoBank is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 595,000 in InfoBank on August 28, 2024 and sell it today you would earn a total of 145,000 from holding InfoBank or generate 24.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. InfoBank
Performance |
| Timeline |
| Bank of America |
| InfoBank |
Bank of America and InfoBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and InfoBank
The main advantage of trading using opposite Bank of America and InfoBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, InfoBank 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 InfoBank will offset losses from the drop in InfoBank's long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Nova |
| InfoBank vs. Korea Real Estate | InfoBank vs. Korea Ratings Co | InfoBank vs. IQuest Co | InfoBank vs. Wonbang Tech Co |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |