Correlation Between Bank of America and AXWAY SOFTWARE
Can any of the company-specific risk be diversified away by investing in both Bank of America and AXWAY SOFTWARE 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 AXWAY SOFTWARE 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 AXWAY SOFTWARE EO, you can compare the effects of market volatilities on Bank of America and AXWAY SOFTWARE 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 AXWAY SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and AXWAY SOFTWARE.
Diversification Opportunities for Bank of America and AXWAY SOFTWARE
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and AXWAY is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and AXWAY SOFTWARE EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXWAY SOFTWARE EO 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 AXWAY SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXWAY SOFTWARE EO has no effect on the direction of Bank of America i.e., Bank of America and AXWAY SOFTWARE go up and down completely randomly.
Pair Corralation between Bank of America and AXWAY SOFTWARE
Considering the 90-day investment horizon Bank of America is expected to generate 1.37 times less return on investment than AXWAY SOFTWARE. But when comparing it to its historical volatility, Bank of America is 1.27 times less risky than AXWAY SOFTWARE. It trades about 0.06 of its potential returns per unit of risk. AXWAY SOFTWARE EO is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,666 in AXWAY SOFTWARE EO on August 28, 2024 and sell it today you would earn a total of 1,094 from holding AXWAY SOFTWARE EO or generate 65.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.55% |
| Values | Daily Returns |
Bank of America vs. AXWAY SOFTWARE EO
Performance |
| Timeline |
| Bank of America |
| AXWAY SOFTWARE EO |
Bank of America and AXWAY SOFTWARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and AXWAY SOFTWARE
The main advantage of trading using opposite Bank of America and AXWAY SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, AXWAY SOFTWARE 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 AXWAY SOFTWARE will offset losses from the drop in AXWAY SOFTWARE's long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Nova |
| AXWAY SOFTWARE vs. INTERCONT HOTELS | AXWAY SOFTWARE vs. FUYO GENERAL LEASE | AXWAY SOFTWARE vs. NH HOTEL GROUP | AXWAY SOFTWARE vs. Air Lease |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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