Correlation Between Bank of America and Autodesk
Can any of the company-specific risk be diversified away by investing in both Bank of America and Autodesk 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 Autodesk 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 Autodesk, you can compare the effects of market volatilities on Bank of America and Autodesk 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 Autodesk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Autodesk.
Diversification Opportunities for Bank of America and Autodesk
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Autodesk is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Autodesk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autodesk 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 Autodesk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autodesk has no effect on the direction of Bank of America i.e., Bank of America and Autodesk go up and down completely randomly.
Pair Corralation between Bank of America and Autodesk
Considering the 90-day investment horizon Bank of America is expected to generate 1.15 times less return on investment than Autodesk. In addition to that, Bank of America is 1.33 times more volatile than Autodesk. It trades about 0.24 of its total potential returns per unit of risk. Autodesk is currently generating about 0.36 per unit of volatility. If you would invest 28,652 in Autodesk on August 27, 2024 and sell it today you would earn a total of 3,475 from holding Autodesk or generate 12.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Autodesk
Performance |
| Timeline |
| Bank of America |
| Autodesk |
Bank of America and Autodesk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Autodesk
The main advantage of trading using opposite Bank of America and Autodesk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Autodesk 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 Autodesk will offset losses from the drop in Autodesk's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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