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 Global, 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
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bank and Desjardins is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Desjardins RI Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desjardins RI Global 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 Global 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 under-perform the Desjardins. In addition to that, Bank of America is 1.38 times more volatile than Desjardins RI Global. It trades about -0.31 of its total potential returns per unit of risk. Desjardins RI Global is currently generating about 0.07 per unit of volatility. If you would invest 3,228 in Desjardins RI Global on November 27, 2024 and sell it today you would earn a total of 29.00 from holding Desjardins RI Global or generate 0.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Desjardins RI Global
Performance |
| Timeline |
| Bank of America |
| Desjardins RI Global |
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. Global X Global | Desjardins vs. Desjardins RI USA | Desjardins vs. Desjardins RI Canada | Desjardins vs. Desjardins Canadian Preferred |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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