Correlation Between Bank of America and SIMMTECH
Can any of the company-specific risk be diversified away by investing in both Bank of America and SIMMTECH 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 SIMMTECH 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 SIMMTECH Co, you can compare the effects of market volatilities on Bank of America and SIMMTECH 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 SIMMTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and SIMMTECH.
Diversification Opportunities for Bank of America and SIMMTECH
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and SIMMTECH is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and SIMMTECH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMMTECH 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 SIMMTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMMTECH has no effect on the direction of Bank of America i.e., Bank of America and SIMMTECH go up and down completely randomly.
Pair Corralation between Bank of America and SIMMTECH
Considering the 90-day investment horizon Bank of America is expected to generate 0.51 times more return on investment than SIMMTECH. However, Bank of America is 1.96 times less risky than SIMMTECH. It trades about 0.14 of its potential returns per unit of risk. SIMMTECH Co is currently generating about -0.13 per unit of risk. If you would invest 2,756 in Bank of America on September 1, 2024 and sell it today you would earn a total of 1,995 from holding Bank of America or generate 72.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 97.77% |
| Values | Daily Returns |
Bank of America vs. SIMMTECH Co
Performance |
| Timeline |
| Bank of America |
| SIMMTECH |
Bank of America and SIMMTECH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and SIMMTECH
The main advantage of trading using opposite Bank of America and SIMMTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, SIMMTECH 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 SIMMTECH will offset losses from the drop in SIMMTECH'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 |
| SIMMTECH vs. Iljin Materials Co | SIMMTECH vs. Daishin Information Communications | SIMMTECH vs. LS Materials | SIMMTECH vs. Daou Data Corp |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |