Correlation Between Bank of America and UBS AG
Can any of the company-specific risk be diversified away by investing in both Bank of America and UBS AG 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 UBS AG 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 UBS AG London, you can compare the effects of market volatilities on Bank of America and UBS AG 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 UBS AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and UBS AG.
Diversification Opportunities for Bank of America and UBS AG
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and UBS is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and UBS AG London in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS AG London 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 UBS AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS AG London has no effect on the direction of Bank of America i.e., Bank of America and UBS AG go up and down completely randomly.
Pair Corralation between Bank of America and UBS AG
Considering the 90-day investment horizon Bank of America is expected to generate 1.53 times less return on investment than UBS AG. But when comparing it to its historical volatility, Bank of America is 1.1 times less risky than UBS AG. It trades about 0.18 of its potential returns per unit of risk. UBS AG London is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,879 in UBS AG London on November 3, 2024 and sell it today you would earn a total of 133.00 from holding UBS AG London or generate 7.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. UBS AG London
Performance |
| Timeline |
| Bank of America |
| UBS AG London |
Bank of America and UBS AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and UBS AG
The main advantage of trading using opposite Bank of America and UBS AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, UBS AG 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 UBS AG will offset losses from the drop in UBS AG'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 |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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