Correlation Between Bank of America and ICD
Can any of the company-specific risk be diversified away by investing in both Bank of America and ICD 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 ICD 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 ICD Co, you can compare the effects of market volatilities on Bank of America and ICD 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 ICD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and ICD.
Diversification Opportunities for Bank of America and ICD
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and ICD is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and ICD Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICD Co 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 ICD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICD Co has no effect on the direction of Bank of America i.e., Bank of America and ICD go up and down completely randomly.
Pair Corralation between Bank of America and ICD
Considering the 90-day investment horizon Bank of America is expected to generate 0.71 times more return on investment than ICD. However, Bank of America is 1.41 times less risky than ICD. It trades about 0.27 of its potential returns per unit of risk. ICD Co is currently generating about 0.12 per unit of risk. If you would invest 4,253 in Bank of America on August 30, 2024 and sell it today you would earn a total of 524.00 from holding Bank of America or generate 12.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. ICD Co
Performance |
| Timeline |
| Bank of America |
| ICD Co |
Bank of America and ICD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and ICD
The main advantage of trading using opposite Bank of America and ICD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, ICD 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 ICD will offset losses from the drop in ICD's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings |
| ICD vs. SFA Engineering | ICD vs. APS Holdings | ICD vs. Soulbrain Holdings Co | ICD vs. JUSUNG ENGINEERING 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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