Correlation Between Bank of America and SolarEdge Technologies
Can any of the company-specific risk be diversified away by investing in both Bank of America and SolarEdge Technologies 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 SolarEdge Technologies 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 SolarEdge Technologies, you can compare the effects of market volatilities on Bank of America and SolarEdge Technologies 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 SolarEdge Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and SolarEdge Technologies.
Diversification Opportunities for Bank of America and SolarEdge Technologies
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and SolarEdge is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and SolarEdge Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolarEdge Technologies 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 SolarEdge Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolarEdge Technologies has no effect on the direction of Bank of America i.e., Bank of America and SolarEdge Technologies go up and down completely randomly.
Pair Corralation between Bank of America and SolarEdge Technologies
Considering the 90-day investment horizon Bank of America is expected to generate 0.26 times more return on investment than SolarEdge Technologies. However, Bank of America is 3.83 times less risky than SolarEdge Technologies. It trades about 0.21 of its potential returns per unit of risk. SolarEdge Technologies is currently generating about -0.14 per unit of risk. If you would invest 4,234 in Bank of America on August 24, 2024 and sell it today you would earn a total of 412.00 from holding Bank of America or generate 9.73% 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. SolarEdge Technologies
Performance |
| Timeline |
| Bank of America |
| SolarEdge Technologies |
Bank of America and SolarEdge Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and SolarEdge Technologies
The main advantage of trading using opposite Bank of America and SolarEdge Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, SolarEdge Technologies 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 SolarEdge Technologies will offset losses from the drop in SolarEdge Technologies' long position.| Bank of America vs. Amtech Systems | Bank of America vs. Gold Fields Ltd | Bank of America vs. Aegean Airlines SA | Bank of America vs. Merck Company |
| SolarEdge Technologies vs. Darden Restaurants | SolarEdge Technologies vs. Gaztransport et Technigaz | SolarEdge Technologies vs. Greenroc Mining PLC | SolarEdge Technologies vs. Lindsell Train Investment |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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