Correlation Between Bank of America and Tehmag Foods
Can any of the company-specific risk be diversified away by investing in both Bank of America and Tehmag Foods 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 Tehmag Foods 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 Tehmag Foods, you can compare the effects of market volatilities on Bank of America and Tehmag Foods 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 Tehmag Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Tehmag Foods.
Diversification Opportunities for Bank of America and Tehmag Foods
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Tehmag is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Tehmag Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tehmag Foods 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 Tehmag Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tehmag Foods has no effect on the direction of Bank of America i.e., Bank of America and Tehmag Foods go up and down completely randomly.
Pair Corralation between Bank of America and Tehmag Foods
Considering the 90-day investment horizon Bank of America is expected to generate 2.27 times more return on investment than Tehmag Foods. However, Bank of America is 2.27 times more volatile than Tehmag Foods. It trades about 0.1 of its potential returns per unit of risk. Tehmag Foods is currently generating about 0.06 per unit of risk. If you would invest 2,824 in Bank of America on September 1, 2024 and sell it today you would earn a total of 1,927 from holding Bank of America or generate 68.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 98.39% |
| Values | Daily Returns |
Bank of America vs. Tehmag Foods
Performance |
| Timeline |
| Bank of America |
| Tehmag Foods |
Bank of America and Tehmag Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Tehmag Foods
The main advantage of trading using opposite Bank of America and Tehmag Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Tehmag Foods 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 Tehmag Foods will offset losses from the drop in Tehmag Foods' long position.| Bank of America vs. Citigroup | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of | Bank of America vs. JPMorgan Chase Co |
| Tehmag Foods vs. Yuanta Financial Holdings | Tehmag Foods vs. Fubon Financial Holding | Tehmag Foods vs. CHINA DEVELOPMENT FINANCIAL | Tehmag Foods vs. Advanced Wireless Semiconductor |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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