Correlation Between Bank of America and Daikin IndustriesLtd
Can any of the company-specific risk be diversified away by investing in both Bank of America and Daikin IndustriesLtd 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 Daikin IndustriesLtd 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 Daikin IndustriesLtd, you can compare the effects of market volatilities on Bank of America and Daikin IndustriesLtd 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 Daikin IndustriesLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Daikin IndustriesLtd.
Diversification Opportunities for Bank of America and Daikin IndustriesLtd
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and Daikin is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Daikin IndustriesLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daikin IndustriesLtd 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 Daikin IndustriesLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daikin IndustriesLtd has no effect on the direction of Bank of America i.e., Bank of America and Daikin IndustriesLtd go up and down completely randomly.
Pair Corralation between Bank of America and Daikin IndustriesLtd
Considering the 90-day investment horizon Bank of America is expected to generate 0.38 times more return on investment than Daikin IndustriesLtd. However, Bank of America is 2.66 times less risky than Daikin IndustriesLtd. It trades about 0.21 of its potential returns per unit of risk. Daikin IndustriesLtd is currently generating about 0.04 per unit of risk. If you would invest 4,234 in Bank of America on August 24, 2024 and sell it today you would earn a total of 412.00 from holding Bank of America or generate 9.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Daikin IndustriesLtd
Performance |
| Timeline |
| Bank of America |
| Daikin IndustriesLtd |
Bank of America and Daikin IndustriesLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Daikin IndustriesLtd
The main advantage of trading using opposite Bank of America and Daikin IndustriesLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Daikin IndustriesLtd 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 Daikin IndustriesLtd will offset losses from the drop in Daikin IndustriesLtd's long position.| Bank of America vs. Amtech Systems | Bank of America vs. Gold Fields Ltd | Bank of America vs. Aegean Airlines SA | Bank of America vs. Merck Company |
| Daikin IndustriesLtd vs. Lennox International | Daikin IndustriesLtd vs. Lixil Group Corp | Daikin IndustriesLtd vs. Quanex Building Products | Daikin IndustriesLtd vs. Trane Technologies plc |
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 Stocks Directory module to find actively traded stocks across global markets.
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