Correlation Between Bank of America and GUOTAI JUNAN
Can any of the company-specific risk be diversified away by investing in both Bank of America and GUOTAI JUNAN 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 GUOTAI JUNAN 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 GUOTAI JUNAN SEC, you can compare the effects of market volatilities on Bank of America and GUOTAI JUNAN 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 GUOTAI JUNAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and GUOTAI JUNAN.
Diversification Opportunities for Bank of America and GUOTAI JUNAN
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and GUOTAI is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and GUOTAI JUNAN SEC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUOTAI JUNAN SEC 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 GUOTAI JUNAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUOTAI JUNAN SEC has no effect on the direction of Bank of America i.e., Bank of America and GUOTAI JUNAN go up and down completely randomly.
Pair Corralation between Bank of America and GUOTAI JUNAN
Considering the 90-day investment horizon Bank of America is expected to generate 0.75 times more return on investment than GUOTAI JUNAN. However, Bank of America is 1.33 times less risky than GUOTAI JUNAN. It trades about 0.32 of its potential returns per unit of risk. GUOTAI JUNAN SEC is currently generating about 0.08 per unit of risk. If you would invest 4,176 in Bank of America on September 2, 2024 and sell it today you would earn a total of 575.00 from holding Bank of America or generate 13.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of America vs. GUOTAI JUNAN SEC
Performance |
| Timeline |
| Bank of America |
| GUOTAI JUNAN SEC |
Bank of America and GUOTAI JUNAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and GUOTAI JUNAN
The main advantage of trading using opposite Bank of America and GUOTAI JUNAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, GUOTAI JUNAN 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 GUOTAI JUNAN will offset losses from the drop in GUOTAI JUNAN's long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| GUOTAI JUNAN vs. Morgan Stanley | GUOTAI JUNAN vs. The Goldman Sachs | GUOTAI JUNAN vs. Superior Plus Corp | GUOTAI JUNAN vs. NMI Holdings |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |