Correlation Between Bank of America and Asia Broadband
Can any of the company-specific risk be diversified away by investing in both Bank of America and Asia Broadband 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 Asia Broadband 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 Asia Broadband, you can compare the effects of market volatilities on Bank of America and Asia Broadband 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 Asia Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Asia Broadband.
Diversification Opportunities for Bank of America and Asia Broadband
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Asia is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Asia Broadband in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Broadband 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 Asia Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Broadband has no effect on the direction of Bank of America i.e., Bank of America and Asia Broadband go up and down completely randomly.
Pair Corralation between Bank of America and Asia Broadband
Considering the 90-day investment horizon Bank of America is expected to generate 0.35 times more return on investment than Asia Broadband. However, Bank of America is 2.83 times less risky than Asia Broadband. It trades about 0.31 of its potential returns per unit of risk. Asia Broadband is currently generating about -0.06 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 Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of America vs. Asia Broadband
Performance |
| Timeline |
| Bank of America |
| Asia Broadband |
Bank of America and Asia Broadband Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Asia Broadband
The main advantage of trading using opposite Bank of America and Asia Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Asia Broadband 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 Asia Broadband will offset losses from the drop in Asia Broadband'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 |
| Asia Broadband vs. Fury Gold Mines | Asia Broadband vs. Lion Copper and | Asia Broadband vs. Trilogy Metals | Asia Broadband vs. Western Copper and |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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