Correlation Between Bank of America and European Wax
Can any of the company-specific risk be diversified away by investing in both Bank of America and European Wax 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 European Wax 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 European Wax Center, you can compare the effects of market volatilities on Bank of America and European Wax 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 European Wax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and European Wax.
Diversification Opportunities for Bank of America and European Wax
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and European is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and European Wax Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Wax Center 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 European Wax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Wax Center has no effect on the direction of Bank of America i.e., Bank of America and European Wax go up and down completely randomly.
Pair Corralation between Bank of America and European Wax
Considering the 90-day investment horizon Bank of America is expected to generate 0.37 times more return on investment than European Wax. However, Bank of America is 2.68 times less risky than European Wax. It trades about 0.17 of its potential returns per unit of risk. European Wax Center is currently generating about -0.04 per unit of risk. If you would invest 4,044 in Bank of America on August 31, 2024 and sell it today you would earn a total of 733.00 from holding Bank of America or generate 18.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. European Wax Center
Performance |
| Timeline |
| Bank of America |
| European Wax Center |
Bank of America and European Wax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and European Wax
The main advantage of trading using opposite Bank of America and European Wax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, European Wax 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 European Wax will offset losses from the drop in European Wax's long position.| Bank of America vs. RLJ Lodging Trust | Bank of America vs. Aquagold International | Bank of America vs. Stepstone Group | Bank of America vs. Morningstar Unconstrained Allocation |
| European Wax vs. Edgewell Personal Care | European Wax vs. Inter Parfums | European Wax vs. Henkel AG Co | European Wax vs. Mannatech Incorporated |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |