Correlation Between Bank of America and Advantech
Can any of the company-specific risk be diversified away by investing in both Bank of America and Advantech 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 Advantech 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 Advantech Co, you can compare the effects of market volatilities on Bank of America and Advantech 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 Advantech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Advantech.
Diversification Opportunities for Bank of America and Advantech
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Advantech is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Advantech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantech 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 Advantech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantech has no effect on the direction of Bank of America i.e., Bank of America and Advantech go up and down completely randomly.
Pair Corralation between Bank of America and Advantech
Considering the 90-day investment horizon Bank of America is expected to generate 0.96 times more return on investment than Advantech. However, Bank of America is 1.04 times less risky than Advantech. It trades about 0.05 of its potential returns per unit of risk. Advantech Co is currently generating about 0.02 per unit of risk. If you would invest 3,445 in Bank of America on October 25, 2024 and sell it today you would earn a total of 1,223 from holding Bank of America or generate 35.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.38% |
| Values | Daily Returns |
Bank of America vs. Advantech Co
Performance |
| Timeline |
| Bank of America |
| Advantech |
Bank of America and Advantech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Advantech
The main advantage of trading using opposite Bank of America and Advantech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Advantech 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 Advantech will offset losses from the drop in Advantech's long position.| Bank of America vs. JPMorgan Chase Co | Bank of America vs. Bank of America | Bank of America vs. RLJ Lodging Trust | Bank of America vs. PennyMac Finl Svcs |
| Advantech vs. Delta Electronics | Advantech vs. Quanta Computer | Advantech vs. Realtek Semiconductor Corp | Advantech vs. President Chain Store |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |