Correlation Between Bank of America and Ligitek Electronics
Can any of the company-specific risk be diversified away by investing in both Bank of America and Ligitek Electronics 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 Ligitek Electronics 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 Ligitek Electronics Co, you can compare the effects of market volatilities on Bank of America and Ligitek Electronics 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 Ligitek Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Ligitek Electronics.
Diversification Opportunities for Bank of America and Ligitek Electronics
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Ligitek is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Ligitek Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ligitek Electronics 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 Ligitek Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ligitek Electronics has no effect on the direction of Bank of America i.e., Bank of America and Ligitek Electronics go up and down completely randomly.
Pair Corralation between Bank of America and Ligitek Electronics
Considering the 90-day investment horizon Bank of America is expected to generate 2.75 times less return on investment than Ligitek Electronics. But when comparing it to its historical volatility, Bank of America is 2.42 times less risky than Ligitek Electronics. It trades about 0.1 of its potential returns per unit of risk. Ligitek Electronics Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,455 in Ligitek Electronics Co on September 1, 2024 and sell it today you would earn a total of 1,490 from holding Ligitek Electronics Co or generate 60.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Bank of America vs. Ligitek Electronics Co
Performance |
| Timeline |
| Bank of America |
| Ligitek Electronics |
Bank of America and Ligitek Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Ligitek Electronics
The main advantage of trading using opposite Bank of America and Ligitek Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Ligitek Electronics 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 Ligitek Electronics will offset losses from the drop in Ligitek Electronics' 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 |
| Ligitek Electronics vs. Hon Hai Precision | Ligitek Electronics vs. Delta Electronics | Ligitek Electronics vs. LARGAN Precision Co | Ligitek Electronics vs. Yageo 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |