Correlation Between Bank of America and Desjardins
Can any of the company-specific risk be diversified away by investing in both Bank of America and Desjardins 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 Desjardins 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 Desjardins RI Developed, you can compare the effects of market volatilities on Bank of America and Desjardins 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 Desjardins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Desjardins.
Diversification Opportunities for Bank of America and Desjardins
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Desjardins is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Desjardins RI Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desjardins RI Developed 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 Desjardins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desjardins RI Developed has no effect on the direction of Bank of America i.e., Bank of America and Desjardins go up and down completely randomly.
Pair Corralation between Bank of America and Desjardins
Considering the 90-day investment horizon Bank of America is expected to generate 15.03 times more return on investment than Desjardins. However, Bank of America is 15.03 times more volatile than Desjardins RI Developed. It trades about 0.27 of its potential returns per unit of risk. Desjardins RI Developed is currently generating about -0.01 per unit of risk. If you would invest 4,253 in Bank of America on August 30, 2024 and sell it today you would earn a total of 524.00 from holding Bank of America or generate 12.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bank of America vs. Desjardins RI Developed
Performance |
| Timeline |
| Bank of America |
| Desjardins RI Developed |
Bank of America and Desjardins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Desjardins
The main advantage of trading using opposite Bank of America and Desjardins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Desjardins 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 Desjardins will offset losses from the drop in Desjardins' long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
| Desjardins vs. Desjardins American Equity | Desjardins vs. Desjardins RI Canada | Desjardins vs. Desjardins RI Canada | Desjardins vs. Desjardins Canadian Corporate |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |