Correlation Between Bank of America and Advanced Info
Can any of the company-specific risk be diversified away by investing in both Bank of America and Advanced Info 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 Advanced Info 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 Advanced Info Service, you can compare the effects of market volatilities on Bank of America and Advanced Info 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 Advanced Info. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Advanced Info.
Diversification Opportunities for Bank of America and Advanced Info
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Advanced is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Advanced Info Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Info Service 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 Advanced Info. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Info Service has no effect on the direction of Bank of America i.e., Bank of America and Advanced Info go up and down completely randomly.
Pair Corralation between Bank of America and Advanced Info
Considering the 90-day investment horizon Bank of America is expected to generate 1.79 times less return on investment than Advanced Info. In addition to that, Bank of America is 1.04 times more volatile than Advanced Info Service. It trades about 0.1 of its total potential returns per unit of risk. Advanced Info Service is currently generating about 0.19 per unit of volatility. If you would invest 20,282 in Advanced Info Service on August 31, 2024 and sell it today you would earn a total of 8,218 from holding Advanced Info Service or generate 40.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.64% |
| Values | Daily Returns |
Bank of America vs. Advanced Info Service
Performance |
| Timeline |
| Bank of America |
| Advanced Info Service |
Bank of America and Advanced Info Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Advanced Info
The main advantage of trading using opposite Bank of America and Advanced Info positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Advanced Info 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 Advanced Info will offset losses from the drop in Advanced Info's long position.| Bank of America vs. RLJ Lodging Trust | Bank of America vs. Aquagold International | Bank of America vs. Stepstone Group | Bank of America vs. Morningstar Unconstrained Allocation |
| Advanced Info vs. PTT Public | Advanced Info vs. CP ALL Public | Advanced Info vs. Kasikornbank Public | Advanced Info vs. Bangkok Bank Public |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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