Correlation Between Bank of America and Aselsan Elektronik
Can any of the company-specific risk be diversified away by investing in both Bank of America and Aselsan Elektronik 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 Aselsan Elektronik 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 Aselsan Elektronik Sanayi, you can compare the effects of market volatilities on Bank of America and Aselsan Elektronik 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 Aselsan Elektronik. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Aselsan Elektronik.
Diversification Opportunities for Bank of America and Aselsan Elektronik
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Aselsan is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Aselsan Elektronik Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aselsan Elektronik Sanayi 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 Aselsan Elektronik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aselsan Elektronik Sanayi has no effect on the direction of Bank of America i.e., Bank of America and Aselsan Elektronik go up and down completely randomly.
Pair Corralation between Bank of America and Aselsan Elektronik
Considering the 90-day investment horizon Bank of America is expected to generate 3.17 times less return on investment than Aselsan Elektronik. But when comparing it to its historical volatility, Bank of America is 3.23 times less risky than Aselsan Elektronik. It trades about 0.06 of its potential returns per unit of risk. Aselsan Elektronik Sanayi is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,945 in Aselsan Elektronik Sanayi on August 31, 2024 and sell it today you would earn a total of 4,000 from holding Aselsan Elektronik Sanayi or generate 135.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.58% |
| Values | Daily Returns |
Bank of America vs. Aselsan Elektronik Sanayi
Performance |
| Timeline |
| Bank of America |
| Aselsan Elektronik Sanayi |
Bank of America and Aselsan Elektronik Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Aselsan Elektronik
The main advantage of trading using opposite Bank of America and Aselsan Elektronik positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Aselsan Elektronik 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 Aselsan Elektronik will offset losses from the drop in Aselsan Elektronik'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 |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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