Correlation Between Bank of America and Zero One
Can any of the company-specific risk be diversified away by investing in both Bank of America and Zero One 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 Zero One 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 Zero One Technology, you can compare the effects of market volatilities on Bank of America and Zero One 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 Zero One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Zero One.
Diversification Opportunities for Bank of America and Zero One
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Zero is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Zero One Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zero One Technology 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 Zero One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zero One Technology has no effect on the direction of Bank of America i.e., Bank of America and Zero One go up and down completely randomly.
Pair Corralation between Bank of America and Zero One
Considering the 90-day investment horizon Bank of America is expected to generate 2.43 times less return on investment than Zero One. But when comparing it to its historical volatility, Bank of America is 1.89 times less risky than Zero One. It trades about 0.1 of its potential returns per unit of risk. Zero One Technology is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 7,400 in Zero One Technology on September 3, 2024 and sell it today you would earn a total of 4,050 from holding Zero One Technology or generate 54.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Bank of America vs. Zero One Technology
Performance |
| Timeline |
| Bank of America |
| Zero One Technology |
Bank of America and Zero One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Zero One
The main advantage of trading using opposite Bank of America and Zero One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Zero One 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 Zero One will offset losses from the drop in Zero One's long position.| Bank of America vs. Partner Communications | Bank of America vs. Merck Company | Bank of America vs. Western Midstream Partners | Bank of America vs. Edgewise Therapeutics |
| Zero One vs. Ma Kuang Healthcare | Zero One vs. SS Healthcare Holding | Zero One vs. Sunfar Computer Co | Zero One vs. Unitech Computer Co |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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