Correlation Between Bank of America and ASE Industrial
Can any of the company-specific risk be diversified away by investing in both Bank of America and ASE Industrial 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 ASE Industrial 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 ASE Industrial Holding, you can compare the effects of market volatilities on Bank of America and ASE Industrial 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 ASE Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and ASE Industrial.
Diversification Opportunities for Bank of America and ASE Industrial
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bank and ASE is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and ASE Industrial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASE Industrial Holding 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 ASE Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASE Industrial Holding has no effect on the direction of Bank of America i.e., Bank of America and ASE Industrial go up and down completely randomly.
Pair Corralation between Bank of America and ASE Industrial
Considering the 90-day investment horizon Bank of America is expected to generate 1.05 times more return on investment than ASE Industrial. However, Bank of America is 1.05 times more volatile than ASE Industrial Holding. It trades about 0.31 of its potential returns per unit of risk. ASE Industrial Holding is currently generating about -0.07 per unit of risk. If you would invest 4,182 in Bank of America on September 1, 2024 and sell it today you would earn a total of 569.00 from holding Bank of America or generate 13.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of America vs. ASE Industrial Holding
Performance |
| Timeline |
| Bank of America |
| ASE Industrial Holding |
Bank of America and ASE Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and ASE Industrial
The main advantage of trading using opposite Bank of America and ASE Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, ASE Industrial 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 ASE Industrial will offset losses from the drop in ASE Industrial'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 |
| ASE Industrial vs. Delta Electronics | ASE Industrial vs. Novatek Microelectronics Corp | ASE Industrial vs. United Microelectronics | ASE Industrial vs. LARGAN Precision 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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