Correlation Between Bank of America and Athens Medical
Can any of the company-specific risk be diversified away by investing in both Bank of America and Athens Medical 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 Athens Medical 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 Athens Medical CSA, you can compare the effects of market volatilities on Bank of America and Athens Medical 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 Athens Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Athens Medical.
Diversification Opportunities for Bank of America and Athens Medical
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Athens is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Athens Medical CSA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athens Medical CSA 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 Athens Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athens Medical CSA has no effect on the direction of Bank of America i.e., Bank of America and Athens Medical go up and down completely randomly.
Pair Corralation between Bank of America and Athens Medical
Considering the 90-day investment horizon Bank of America is expected to generate 0.68 times more return on investment than Athens Medical. However, Bank of America is 1.47 times less risky than Athens Medical. It trades about 0.11 of its potential returns per unit of risk. Athens Medical CSA is currently generating about 0.02 per unit of risk. If you would invest 3,008 in Bank of America on November 5, 2024 and sell it today you would earn a total of 1,622 from holding Bank of America or generate 53.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.92% |
| Values | Daily Returns |
Bank of America vs. Athens Medical CSA
Performance |
| Timeline |
| Bank of America |
| Athens Medical CSA |
Bank of America and Athens Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Athens Medical
The main advantage of trading using opposite Bank of America and Athens Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Athens Medical 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 Athens Medical will offset losses from the drop in Athens Medical's long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Royal Bank of | Bank of America vs. Canadian Imperial Bank |
| Athens Medical vs. Hellenic Exchanges | Athens Medical vs. Hellenic Telecommunications Organization | Athens Medical vs. GEK TERNA Holdings | Athens Medical vs. Piraeus Port Authority |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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