Correlation Between Bank of America and Mobile Appliance
Can any of the company-specific risk be diversified away by investing in both Bank of America and Mobile Appliance 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 Mobile Appliance 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 Mobile Appliance, you can compare the effects of market volatilities on Bank of America and Mobile Appliance 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 Mobile Appliance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Mobile Appliance.
Diversification Opportunities for Bank of America and Mobile Appliance
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Mobile is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Mobile Appliance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobile Appliance 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 Mobile Appliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobile Appliance has no effect on the direction of Bank of America i.e., Bank of America and Mobile Appliance go up and down completely randomly.
Pair Corralation between Bank of America and Mobile Appliance
Considering the 90-day investment horizon Bank of America is expected to under-perform the Mobile Appliance. But the stock apears to be less risky and, when comparing its historical volatility, Bank of America is 2.37 times less risky than Mobile Appliance. The stock trades about -0.09 of its potential returns per unit of risk. The Mobile Appliance is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 225,500 in Mobile Appliance on November 27, 2024 and sell it today you would lose (9,000) from holding Mobile Appliance or give up 3.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.28% |
| Values | Daily Returns |
Bank of America vs. Mobile Appliance
Performance |
| Timeline |
| Bank of America |
| Mobile Appliance |
Bank of America and Mobile Appliance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Mobile Appliance
The main advantage of trading using opposite Bank of America and Mobile Appliance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Mobile Appliance 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 Mobile Appliance will offset losses from the drop in Mobile Appliance's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
| Mobile Appliance vs. BGF Retail Co | Mobile Appliance vs. Jeju Air Co | Mobile Appliance vs. Samlip General Foods | Mobile Appliance vs. Organic Special Pet |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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