Correlation Between Bank of America and Thanh Dat
Can any of the company-specific risk be diversified away by investing in both Bank of America and Thanh Dat 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 Thanh Dat 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 Thanh Dat Investment, you can compare the effects of market volatilities on Bank of America and Thanh Dat 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 Thanh Dat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Thanh Dat.
Diversification Opportunities for Bank of America and Thanh Dat
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Thanh is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Thanh Dat Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thanh Dat Investment 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 Thanh Dat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thanh Dat Investment has no effect on the direction of Bank of America i.e., Bank of America and Thanh Dat go up and down completely randomly.
Pair Corralation between Bank of America and Thanh Dat
Considering the 90-day investment horizon Bank of America is expected to generate 0.79 times more return on investment than Thanh Dat. However, Bank of America is 1.27 times less risky than Thanh Dat. It trades about 0.24 of its potential returns per unit of risk. Thanh Dat Investment is currently generating about 0.01 per unit of risk. If you would invest 3,945 in Bank of America on August 25, 2024 and sell it today you would earn a total of 755.00 from holding Bank of America or generate 19.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.78% |
| Values | Daily Returns |
Bank of America vs. Thanh Dat Investment
Performance |
| Timeline |
| Bank of America |
| Thanh Dat Investment |
Bank of America and Thanh Dat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Thanh Dat
The main advantage of trading using opposite Bank of America and Thanh Dat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Thanh Dat 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 Thanh Dat will offset losses from the drop in Thanh Dat's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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