Correlation Between Bank of America and Dycasa SA
Can any of the company-specific risk be diversified away by investing in both Bank of America and Dycasa SA 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 Dycasa SA 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 Dycasa SA, you can compare the effects of market volatilities on Bank of America and Dycasa SA 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 Dycasa SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Dycasa SA.
Diversification Opportunities for Bank of America and Dycasa SA
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Dycasa is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Dycasa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dycasa SA 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 Dycasa SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dycasa SA has no effect on the direction of Bank of America i.e., Bank of America and Dycasa SA go up and down completely randomly.
Pair Corralation between Bank of America and Dycasa SA
Considering the 90-day investment horizon Bank of America is expected to generate 4.47 times less return on investment than Dycasa SA. But when comparing it to its historical volatility, Bank of America is 3.39 times less risky than Dycasa SA. It trades about 0.1 of its potential returns per unit of risk. Dycasa SA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 45,650 in Dycasa SA on September 1, 2024 and sell it today you would earn a total of 49,850 from holding Dycasa SA or generate 109.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Bank of America vs. Dycasa SA
Performance |
| Timeline |
| Bank of America |
| Dycasa SA |
Bank of America and Dycasa SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Dycasa SA
The main advantage of trading using opposite Bank of America and Dycasa SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Dycasa SA 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 Dycasa SA will offset losses from the drop in Dycasa SA's long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Dycasa SA vs. Transportadora de Gas | Dycasa SA vs. Compania de Transporte | Dycasa SA vs. Agrometal SAI | Dycasa SA vs. Harmony Gold Mining |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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