Correlation Between Bank of America and Hannover Rück
Can any of the company-specific risk be diversified away by investing in both Bank of America and Hannover Rück 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 Hannover Rück 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 Hannover Rck SE, you can compare the effects of market volatilities on Bank of America and Hannover Rück 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 Hannover Rück. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Hannover Rück.
Diversification Opportunities for Bank of America and Hannover Rück
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Hannover is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Hannover Rck SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannover Rck SE 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 Hannover Rück. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannover Rck SE has no effect on the direction of Bank of America i.e., Bank of America and Hannover Rück go up and down completely randomly.
Pair Corralation between Bank of America and Hannover Rück
Considering the 90-day investment horizon Bank of America is expected to generate 1.12 times more return on investment than Hannover Rück. However, Bank of America is 1.12 times more volatile than Hannover Rck SE. It trades about 0.11 of its potential returns per unit of risk. Hannover Rck SE is currently generating about 0.04 per unit of risk. If you would invest 3,350 in Bank of America on September 3, 2024 and sell it today you would earn a total of 1,401 from holding Bank of America or generate 41.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.85% |
| Values | Daily Returns |
Bank of America vs. Hannover Rck SE
Performance |
| Timeline |
| Bank of America |
| Hannover Rck SE |
Bank of America and Hannover Rück Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Hannover Rück
The main advantage of trading using opposite Bank of America and Hannover Rück positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Hannover Rück 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 Hannover Rück will offset losses from the drop in Hannover Rück's long position.| Bank of America vs. Partner Communications | Bank of America vs. Merck Company | Bank of America vs. Western Midstream Partners | Bank of America vs. Edgewise Therapeutics |
| Hannover Rück vs. Selective Insurance Group | Hannover Rück vs. American Airlines Group | Hannover Rück vs. AEGEAN AIRLINES | Hannover Rück vs. Nok Airlines PCL |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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