Correlation Between Bank of America and American Leisure
Can any of the company-specific risk be diversified away by investing in both Bank of America and American Leisure 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 American Leisure 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 American Leisure Holdings, you can compare the effects of market volatilities on Bank of America and American Leisure 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 American Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and American Leisure.
Diversification Opportunities for Bank of America and American Leisure
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and American is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and American Leisure Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Leisure Holdings 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 American Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Leisure Holdings has no effect on the direction of Bank of America i.e., Bank of America and American Leisure go up and down completely randomly.
Pair Corralation between Bank of America and American Leisure
Considering the 90-day investment horizon Bank of America is expected to generate 148.5 times less return on investment than American Leisure. But when comparing it to its historical volatility, Bank of America is 44.91 times less risky than American Leisure. It trades about 0.05 of its potential returns per unit of risk. American Leisure Holdings is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 0.01 in American Leisure Holdings on November 18, 2024 and sell it today you would earn a total of 0.00 from holding American Leisure Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. American Leisure Holdings
Performance |
| Timeline |
| Bank of America |
| American Leisure Holdings |
Bank of America and American Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and American Leisure
The main advantage of trading using opposite Bank of America and American Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, American Leisure 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 American Leisure will offset losses from the drop in American Leisure's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
| American Leisure vs. Newron Sport | American Leisure vs. Gold Ent Group | American Leisure vs. Interups | American Leisure vs. TransAKT |
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.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |