Correlation Between Bank of America and FPT Digital
Can any of the company-specific risk be diversified away by investing in both Bank of America and FPT Digital 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 FPT Digital 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 FPT Digital Retail, you can compare the effects of market volatilities on Bank of America and FPT Digital 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 FPT Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and FPT Digital.
Diversification Opportunities for Bank of America and FPT Digital
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and FPT is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and FPT Digital Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FPT Digital Retail 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 FPT Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FPT Digital Retail has no effect on the direction of Bank of America i.e., Bank of America and FPT Digital go up and down completely randomly.
Pair Corralation between Bank of America and FPT Digital
Considering the 90-day investment horizon Bank of America is expected to generate 2.13 times less return on investment than FPT Digital. But when comparing it to its historical volatility, Bank of America is 1.13 times less risky than FPT Digital. It trades about 0.21 of its potential returns per unit of risk. FPT Digital Retail is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 18,380,000 in FPT Digital Retail on October 28, 2024 and sell it today you would earn a total of 2,220,000 from holding FPT Digital Retail or generate 12.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Bank of America vs. FPT Digital Retail
Performance |
| Timeline |
| Bank of America |
| FPT Digital Retail |
Bank of America and FPT Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and FPT Digital
The main advantage of trading using opposite Bank of America and FPT Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, FPT Digital 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 FPT Digital will offset losses from the drop in FPT Digital's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC |
| FPT Digital vs. TDT Investment and | FPT Digital vs. AgriBank Securities JSC | FPT Digital vs. Petrolimex International Trading | FPT Digital vs. Military Insurance Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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