Correlation Between Bank of America and Elbit Imaging
Can any of the company-specific risk be diversified away by investing in both Bank of America and Elbit Imaging 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 Elbit Imaging 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 Elbit Imaging, you can compare the effects of market volatilities on Bank of America and Elbit Imaging 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 Elbit Imaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Elbit Imaging.
Diversification Opportunities for Bank of America and Elbit Imaging
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Elbit is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Elbit Imaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Imaging 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 Elbit Imaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elbit Imaging has no effect on the direction of Bank of America i.e., Bank of America and Elbit Imaging go up and down completely randomly.
Pair Corralation between Bank of America and Elbit Imaging
Considering the 90-day investment horizon Bank of America is expected to generate 1.17 times less return on investment than Elbit Imaging. In addition to that, Bank of America is 1.13 times more volatile than Elbit Imaging. It trades about 0.27 of its total potential returns per unit of risk. Elbit Imaging is currently generating about 0.35 per unit of volatility. If you would invest 46,600 in Elbit Imaging on August 29, 2024 and sell it today you would earn a total of 5,600 from holding Elbit Imaging or generate 12.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 82.61% |
| Values | Daily Returns |
Bank of America vs. Elbit Imaging
Performance |
| Timeline |
| Bank of America |
| Elbit Imaging |
Bank of America and Elbit Imaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Elbit Imaging
The main advantage of trading using opposite Bank of America and Elbit Imaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Elbit Imaging 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 Elbit Imaging will offset losses from the drop in Elbit Imaging's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. JPMorgan Chase Co |
| Elbit Imaging vs. Clal Insurance Enterprises | Elbit Imaging vs. Harel Insurance Investments | Elbit Imaging vs. Feat Fund Investments | Elbit Imaging vs. Blender Financial Technologies |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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