Correlation Between Bank of America and Arion Banki
Can any of the company-specific risk be diversified away by investing in both Bank of America and Arion Banki 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 Arion Banki 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 Arion banki hf, you can compare the effects of market volatilities on Bank of America and Arion Banki 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 Arion Banki. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Arion Banki.
Diversification Opportunities for Bank of America and Arion Banki
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Arion is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Arion banki hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arion banki hf 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 Arion Banki. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arion banki hf has no effect on the direction of Bank of America i.e., Bank of America and Arion Banki go up and down completely randomly.
Pair Corralation between Bank of America and Arion Banki
Considering the 90-day investment horizon Bank of America is expected to generate 2.1 times more return on investment than Arion Banki. However, Bank of America is 2.1 times more volatile than Arion banki hf. It trades about 0.31 of its potential returns per unit of risk. Arion banki hf is currently generating about -0.03 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 Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of America vs. Arion banki hf
Performance |
| Timeline |
| Bank of America |
| Arion banki hf |
Bank of America and Arion Banki Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Arion Banki
The main advantage of trading using opposite Bank of America and Arion Banki positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Arion Banki 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 Arion Banki will offset losses from the drop in Arion Banki's long position.| Bank of America vs. Citigroup | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings |
| Arion Banki vs. slandsbanki hf | Arion Banki vs. Icelandair Group hf | Arion Banki vs. Marel hf | Arion Banki vs. Kvika banki hf |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Global Correlations Find global opportunities by holding instruments from different markets |