Correlation Between Bank of America and FORMPIPE SOFTWARE
Can any of the company-specific risk be diversified away by investing in both Bank of America and FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE AB, you can compare the effects of market volatilities on Bank of America and FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and FORMPIPE SOFTWARE.
Diversification Opportunities for Bank of America and FORMPIPE SOFTWARE
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and FORMPIPE is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and FORMPIPE SOFTWARE AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORMPIPE SOFTWARE has no effect on the direction of Bank of America i.e., Bank of America and FORMPIPE SOFTWARE go up and down completely randomly.
Pair Corralation between Bank of America and FORMPIPE SOFTWARE
Considering the 90-day investment horizon Bank of America is expected to generate 0.65 times more return on investment than FORMPIPE SOFTWARE. However, Bank of America is 1.54 times less risky than FORMPIPE SOFTWARE. It trades about 0.1 of its potential returns per unit of risk. FORMPIPE SOFTWARE AB is currently generating about 0.04 per unit of risk. If you would invest 2,820 in Bank of America on August 31, 2024 and sell it today you would earn a total of 1,931 from holding Bank of America or generate 68.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.16% |
| Values | Daily Returns |
Bank of America vs. FORMPIPE SOFTWARE AB
Performance |
| Timeline |
| Bank of America |
| FORMPIPE SOFTWARE |
Bank of America and FORMPIPE SOFTWARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and FORMPIPE SOFTWARE
The main advantage of trading using opposite Bank of America and FORMPIPE SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE will offset losses from the drop in FORMPIPE SOFTWARE'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 |
| FORMPIPE SOFTWARE vs. MGIC INVESTMENT | FORMPIPE SOFTWARE vs. SLR Investment Corp | FORMPIPE SOFTWARE vs. SIMS METAL MGT | FORMPIPE SOFTWARE vs. Virtus Investment Partners |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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