Correlation Between Bank of America and Aelf
Can any of the company-specific risk be diversified away by investing in both Bank of America and Aelf 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 Aelf 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 aelf, you can compare the effects of market volatilities on Bank of America and Aelf 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 Aelf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Aelf.
Diversification Opportunities for Bank of America and Aelf
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Aelf is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and aelf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on aelf 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 Aelf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of aelf has no effect on the direction of Bank of America i.e., Bank of America and Aelf go up and down completely randomly.
Pair Corralation between Bank of America and Aelf
Considering the 90-day investment horizon Bank of America is expected to generate 4.73 times less return on investment than Aelf. But when comparing it to its historical volatility, Bank of America is 4.5 times less risky than Aelf. It trades about 0.27 of its potential returns per unit of risk. aelf is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 36.00 in aelf on August 30, 2024 and sell it today you would earn a total of 23.00 from holding aelf or generate 63.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. aelf
Performance |
| Timeline |
| Bank of America |
| aelf |
Bank of America and Aelf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Aelf
The main advantage of trading using opposite Bank of America and Aelf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Aelf 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 Aelf will offset losses from the drop in Aelf's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| 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 | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |