Correlation Between Bank of America and Hubersuhner
Can any of the company-specific risk be diversified away by investing in both Bank of America and Hubersuhner 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 Hubersuhner 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 Hubersuhner AG, you can compare the effects of market volatilities on Bank of America and Hubersuhner 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 Hubersuhner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Hubersuhner.
Diversification Opportunities for Bank of America and Hubersuhner
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Hubersuhner is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Hubersuhner AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubersuhner AG 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 Hubersuhner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubersuhner AG has no effect on the direction of Bank of America i.e., Bank of America and Hubersuhner go up and down completely randomly.
Pair Corralation between Bank of America and Hubersuhner
Considering the 90-day investment horizon Bank of America is expected to generate 1.54 times more return on investment than Hubersuhner. However, Bank of America is 1.54 times more volatile than Hubersuhner AG. It trades about 0.18 of its potential returns per unit of risk. Hubersuhner AG is currently generating about -0.2 per unit of risk. If you would invest 3,991 in Bank of America on August 29, 2024 and sell it today you would earn a total of 784.00 from holding Bank of America or generate 19.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 98.46% |
Values | Daily Returns |
Bank of America vs. Hubersuhner AG
Performance |
Timeline |
Bank of America |
Hubersuhner AG |
Bank of America and Hubersuhner Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of America and Hubersuhner
The main advantage of trading using opposite Bank of America and Hubersuhner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Hubersuhner 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 Hubersuhner will offset losses from the drop in Hubersuhner'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. JPMorgan Chase Co |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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