Correlation Between Bank of America and Delivery Hero
Can any of the company-specific risk be diversified away by investing in both Bank of America and Delivery Hero 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 Delivery Hero 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 Delivery Hero SE, you can compare the effects of market volatilities on Bank of America and Delivery Hero 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 Delivery Hero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Delivery Hero.
Diversification Opportunities for Bank of America and Delivery Hero
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Delivery is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Delivery Hero SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delivery Hero SE 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 Delivery Hero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delivery Hero SE has no effect on the direction of Bank of America i.e., Bank of America and Delivery Hero go up and down completely randomly.
Pair Corralation between Bank of America and Delivery Hero
Considering the 90-day investment horizon Bank of America is expected to generate 0.36 times more return on investment than Delivery Hero. However, Bank of America is 2.82 times less risky than Delivery Hero. It trades about 0.1 of its potential returns per unit of risk. Delivery Hero SE is currently generating about 0.02 per unit of risk. If you would invest 2,824 in Bank of America on September 1, 2024 and sell it today you would earn a total of 1,927 from holding Bank of America or generate 68.24% 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. Delivery Hero SE
Performance |
| Timeline |
| Bank of America |
| Delivery Hero SE |
Bank of America and Delivery Hero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Delivery Hero
The main advantage of trading using opposite Bank of America and Delivery Hero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Delivery Hero 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 Delivery Hero will offset losses from the drop in Delivery Hero'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. JPMorgan Chase Co |
| Delivery Hero vs. Monotaro Co | Delivery Hero vs. Phonex Inc | Delivery Hero vs. 1StdibsCom | Delivery Hero vs. Natural Health Trend |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |