Correlation Between Bank of America and Intel
Can any of the company-specific risk be diversified away by investing in both Bank of America and Intel 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 Intel 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 Intel, you can compare the effects of market volatilities on Bank of America and Intel 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 Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Intel.
Diversification Opportunities for Bank of America and Intel
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Intel is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of Bank of America i.e., Bank of America and Intel go up and down completely randomly.
Pair Corralation between Bank of America and Intel
Considering the 90-day investment horizon Bank of America is expected to generate 0.54 times more return on investment than Intel. However, Bank of America is 1.85 times less risky than Intel. It trades about 0.29 of its potential returns per unit of risk. Intel is currently generating about 0.13 per unit of risk. If you would invest 4,231 in Bank of America on August 31, 2024 and sell it today you would earn a total of 546.00 from holding Bank of America or generate 12.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 90.91% |
| Values | Daily Returns |
Bank of America vs. Intel
Performance |
| Timeline |
| Bank of America |
| Intel |
Bank of America and Intel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Intel
The main advantage of trading using opposite Bank of America and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Intel 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 Intel will offset losses from the drop in Intel's long position.| Bank of America vs. RLJ Lodging Trust | Bank of America vs. Aquagold International | Bank of America vs. Stepstone Group | Bank of America vs. Morningstar Unconstrained Allocation |
| Intel vs. HDFC Bank Limited | Intel vs. Align Technology | Intel vs. G2D Investments | Intel vs. Prudential Financial |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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