Correlation Between Bank of America and Infosys
Can any of the company-specific risk be diversified away by investing in both Bank of America and Infosys 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 Infosys 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 Infosys Ltd ADR, you can compare the effects of market volatilities on Bank of America and Infosys 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 Infosys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Infosys.
Diversification Opportunities for Bank of America and Infosys
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Infosys is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Infosys Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Ltd ADR 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 Infosys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infosys Ltd ADR has no effect on the direction of Bank of America i.e., Bank of America and Infosys go up and down completely randomly.
Pair Corralation between Bank of America and Infosys
Considering the 90-day investment horizon Bank of America is expected to generate 1.31 times more return on investment than Infosys. However, Bank of America is 1.31 times more volatile than Infosys Ltd ADR. It trades about 0.27 of its potential returns per unit of risk. Infosys Ltd ADR is currently generating about 0.13 per unit of risk. If you would invest 4,253 in Bank of America on August 30, 2024 and sell it today you would earn a total of 524.00 from holding Bank of America or generate 12.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Infosys Ltd ADR
Performance |
| Timeline |
| Bank of America |
| Infosys Ltd ADR |
Bank of America and Infosys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Infosys
The main advantage of trading using opposite Bank of America and Infosys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Infosys 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 Infosys will offset losses from the drop in Infosys' long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings |
| Infosys vs. The Hackett Group | Infosys vs. Nayax | Infosys vs. Formula Systems 1985 | Infosys vs. Information Services Group |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |