Correlation Between Bank of America and Industrial Urban
Can any of the company-specific risk be diversified away by investing in both Bank of America and Industrial Urban 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 Industrial Urban 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 Industrial Urban Development, you can compare the effects of market volatilities on Bank of America and Industrial Urban 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 Industrial Urban. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Industrial Urban.
Diversification Opportunities for Bank of America and Industrial Urban
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bank and Industrial is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Industrial Urban Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Urban Dev 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 Industrial Urban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Urban Dev has no effect on the direction of Bank of America i.e., Bank of America and Industrial Urban go up and down completely randomly.
Pair Corralation between Bank of America and Industrial Urban
Considering the 90-day investment horizon Bank of America is expected to generate 1.11 times more return on investment than Industrial Urban. However, Bank of America is 1.11 times more volatile than Industrial Urban Development. It trades about 0.12 of its potential returns per unit of risk. Industrial Urban Development is currently generating about 0.09 per unit of risk. If you would invest 4,166 in Bank of America on October 25, 2024 and sell it today you would earn a total of 473.00 from holding Bank of America or generate 11.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 93.75% |
| Values | Daily Returns |
Bank of America vs. Industrial Urban Development
Performance |
| Timeline |
| Bank of America |
| Industrial Urban Dev |
Bank of America and Industrial Urban Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Industrial Urban
The main advantage of trading using opposite Bank of America and Industrial Urban positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Industrial Urban 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 Industrial Urban will offset losses from the drop in Industrial Urban's long position.| Bank of America vs. JPMorgan Chase Co | Bank of America vs. Bank of America | Bank of America vs. RLJ Lodging Trust | Bank of America vs. PennyMac Finl Svcs |
| Industrial Urban vs. Truong Thanh Furniture | Industrial Urban vs. Transport and Industry | Industrial Urban vs. Song Hong Aluminum | Industrial Urban vs. Riverway Management JSC |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Stocks Directory Find actively traded stocks across global markets | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |