Correlation Between Bank of America and Dongkuk Structures
Can any of the company-specific risk be diversified away by investing in both Bank of America and Dongkuk Structures 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 Dongkuk Structures 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 Dongkuk Structures Construction, you can compare the effects of market volatilities on Bank of America and Dongkuk Structures 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 Dongkuk Structures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Dongkuk Structures.
Diversification Opportunities for Bank of America and Dongkuk Structures
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Dongkuk is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Dongkuk Structures Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongkuk Structures 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 Dongkuk Structures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongkuk Structures has no effect on the direction of Bank of America i.e., Bank of America and Dongkuk Structures go up and down completely randomly.
Pair Corralation between Bank of America and Dongkuk Structures
Considering the 90-day investment horizon Bank of America is expected to generate 0.46 times more return on investment than Dongkuk Structures. However, Bank of America is 2.15 times less risky than Dongkuk Structures. It trades about 0.1 of its potential returns per unit of risk. Dongkuk Structures Construction is currently generating about -0.06 per unit of risk. If you would invest 3,946 in Bank of America on September 3, 2024 and sell it today you would earn a total of 805.00 from holding Bank of America or generate 20.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 96.8% |
| Values | Daily Returns |
Bank of America vs. Dongkuk Structures Constructio
Performance |
| Timeline |
| Bank of America |
| Dongkuk Structures |
Bank of America and Dongkuk Structures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Dongkuk Structures
The main advantage of trading using opposite Bank of America and Dongkuk Structures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Dongkuk Structures 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 Dongkuk Structures will offset losses from the drop in Dongkuk Structures' 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 |
| Dongkuk Structures vs. LG Display | Dongkuk Structures vs. Hyundai Motor | Dongkuk Structures vs. Hyundai Motor Co | Dongkuk Structures vs. Hyundai Motor 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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