Correlation Between Bank of America and El Mor
Can any of the company-specific risk be diversified away by investing in both Bank of America and El Mor 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 El Mor 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 El Mor Electric Installation, you can compare the effects of market volatilities on Bank of America and El Mor 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 El Mor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and El Mor.
Diversification Opportunities for Bank of America and El Mor
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and ELMR is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and El Mor Electric Installation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Mor Electric 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 El Mor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Mor Electric has no effect on the direction of Bank of America i.e., Bank of America and El Mor go up and down completely randomly.
Pair Corralation between Bank of America and El Mor
Considering the 90-day investment horizon Bank of America is expected to generate 0.82 times more return on investment than El Mor. However, Bank of America is 1.23 times less risky than El Mor. It trades about 0.1 of its potential returns per unit of risk. El Mor Electric Installation is currently generating about 0.04 per unit of risk. If you would invest 2,824 in Bank of America on September 1, 2024 and sell it today you would earn a total of 1,927 from holding Bank of America or generate 68.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 78.23% |
| Values | Daily Returns |
Bank of America vs. El Mor Electric Installation
Performance |
| Timeline |
| Bank of America |
| El Mor Electric |
Bank of America and El Mor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and El Mor
The main advantage of trading using opposite Bank of America and El Mor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, El Mor 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 El Mor will offset losses from the drop in El Mor's long position.| Bank of America vs. Citigroup | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of | Bank of America vs. JPMorgan Chase Co |
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 Stocks Directory module to find actively traded stocks across global markets.
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