Correlation Between Bank of America and Cognyte Software
Can any of the company-specific risk be diversified away by investing in both Bank of America and Cognyte Software 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 Cognyte Software 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 Cognyte Software, you can compare the effects of market volatilities on Bank of America and Cognyte Software 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 Cognyte Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Cognyte Software.
Diversification Opportunities for Bank of America and Cognyte Software
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Cognyte is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Cognyte Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognyte Software 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 Cognyte Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognyte Software has no effect on the direction of Bank of America i.e., Bank of America and Cognyte Software go up and down completely randomly.
Pair Corralation between Bank of America and Cognyte Software
Considering the 90-day investment horizon Bank of America is expected to under-perform the Cognyte Software. But the stock apears to be less risky and, when comparing its historical volatility, Bank of America is 2.59 times less risky than Cognyte Software. The stock trades about -0.03 of its potential returns per unit of risk. The Cognyte Software is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 795.00 in Cognyte Software on October 26, 2024 and sell it today you would earn a total of 155.00 from holding Cognyte Software or generate 19.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Cognyte Software
Performance |
| Timeline |
| Bank of America |
| Cognyte Software |
Bank of America and Cognyte Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Cognyte Software
The main advantage of trading using opposite Bank of America and Cognyte Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Cognyte Software 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 Cognyte Software will offset losses from the drop in Cognyte Software's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC |
| Cognyte Software vs. CSG Systems International | Cognyte Software vs. Evertec | Cognyte Software vs. Varonis Systems | Cognyte Software vs. Radware |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |