Correlation Between Bank of America and Elekta AB
Can any of the company-specific risk be diversified away by investing in both Bank of America and Elekta AB 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 Elekta AB 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 Elekta AB, you can compare the effects of market volatilities on Bank of America and Elekta AB 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 Elekta AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Elekta AB.
Diversification Opportunities for Bank of America and Elekta AB
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Elekta is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Elekta AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elekta AB 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 Elekta AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elekta AB has no effect on the direction of Bank of America i.e., Bank of America and Elekta AB go up and down completely randomly.
Pair Corralation between Bank of America and Elekta AB
Considering the 90-day investment horizon Bank of America is expected to generate 1.25 times more return on investment than Elekta AB. However, Bank of America is 1.25 times more volatile than Elekta AB. It trades about 0.27 of its potential returns per unit of risk. Elekta AB is currently generating about -0.23 per unit of risk. If you would invest 4,189 in Bank of America on August 26, 2024 and sell it today you would earn a total of 511.00 from holding Bank of America or generate 12.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Elekta AB
Performance |
| Timeline |
| Bank of America |
| Elekta AB |
Bank of America and Elekta AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Elekta AB
The main advantage of trading using opposite Bank of America and Elekta AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Elekta AB 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 Elekta AB will offset losses from the drop in Elekta AB'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 |
| Elekta AB vs. Addtech AB | Elekta AB vs. Lifco AB | Elekta AB vs. Indutrade AB | Elekta AB vs. Lagercrantz Group AB |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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