Correlation Between Bank of America and Haier Smart
Can any of the company-specific risk be diversified away by investing in both Bank of America and Haier Smart 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 Haier Smart 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 Haier Smart Home, you can compare the effects of market volatilities on Bank of America and Haier Smart 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 Haier Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Haier Smart.
Diversification Opportunities for Bank of America and Haier Smart
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Haier is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Haier Smart Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haier Smart Home 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 Haier Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haier Smart Home has no effect on the direction of Bank of America i.e., Bank of America and Haier Smart go up and down completely randomly.
Pair Corralation between Bank of America and Haier Smart
Considering the 90-day investment horizon Bank of America is expected to generate 0.54 times more return on investment than Haier Smart. However, Bank of America is 1.86 times less risky than Haier Smart. It trades about 0.14 of its potential returns per unit of risk. Haier Smart Home is currently generating about -0.04 per unit of risk. If you would invest 4,481 in Bank of America on November 4, 2024 and sell it today you would earn a total of 149.00 from holding Bank of America or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Haier Smart Home
Performance |
| Timeline |
| Bank of America |
| Haier Smart Home |
Bank of America and Haier Smart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Haier Smart
The main advantage of trading using opposite Bank of America and Haier Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Haier Smart 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 Haier Smart will offset losses from the drop in Haier Smart'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. Royal Bank of |
| Haier Smart vs. Whirlpool | Haier Smart vs. Ethan Allen Interiors | Haier Smart vs. Mohawk Industries | Haier Smart vs. Tempur Sealy International |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |