Correlation Between Bank of America and Alpha Technology
Can any of the company-specific risk be diversified away by investing in both Bank of America and Alpha Technology 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 Alpha Technology 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 Alpha Technology Group, you can compare the effects of market volatilities on Bank of America and Alpha Technology 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 Alpha Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Alpha Technology.
Diversification Opportunities for Bank of America and Alpha Technology
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Alpha is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Alpha Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Technology 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 Alpha Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Technology has no effect on the direction of Bank of America i.e., Bank of America and Alpha Technology go up and down completely randomly.
Pair Corralation between Bank of America and Alpha Technology
Considering the 90-day investment horizon Bank of America is expected to generate 3.86 times less return on investment than Alpha Technology. But when comparing it to its historical volatility, Bank of America is 5.57 times less risky than Alpha Technology. It trades about 0.24 of its potential returns per unit of risk. Alpha Technology Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,077 in Alpha Technology Group on August 27, 2024 and sell it today you would earn a total of 343.00 from holding Alpha Technology Group or generate 31.85% 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. Alpha Technology Group
Performance |
| Timeline |
| Bank of America |
| Alpha Technology |
Bank of America and Alpha Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Alpha Technology
The main advantage of trading using opposite Bank of America and Alpha Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Alpha Technology 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 Alpha Technology will offset losses from the drop in Alpha Technology's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Alpha Technology vs. Kite Realty Group | Alpha Technology vs. BBB Foods | Alpha Technology vs. Paiute Oil Mining | Alpha Technology vs. Inhibrx |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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