Correlation Between Bank of America and Jerónimo Martins
Can any of the company-specific risk be diversified away by investing in both Bank of America and Jerónimo Martins 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 Jerónimo Martins 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 Jernimo Martins SGPS, you can compare the effects of market volatilities on Bank of America and Jerónimo Martins 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 Jerónimo Martins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Jerónimo Martins.
Diversification Opportunities for Bank of America and Jerónimo Martins
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bank and Jerónimo is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Jernimo Martins SGPS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jernimo Martins SGPS 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 Jerónimo Martins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jernimo Martins SGPS has no effect on the direction of Bank of America i.e., Bank of America and Jerónimo Martins go up and down completely randomly.
Pair Corralation between Bank of America and Jerónimo Martins
Considering the 90-day investment horizon Bank of America is expected to generate 1.2 times less return on investment than Jerónimo Martins. But when comparing it to its historical volatility, Bank of America is 1.33 times less risky than Jerónimo Martins. It trades about 0.15 of its potential returns per unit of risk. Jernimo Martins SGPS is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,848 in Jernimo Martins SGPS on November 8, 2024 and sell it today you would earn a total of 86.00 from holding Jernimo Martins SGPS or generate 4.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Bank of America vs. Jernimo Martins SGPS
Performance |
| Timeline |
| Bank of America |
| Jernimo Martins SGPS |
Bank of America and Jerónimo Martins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Jerónimo Martins
The main advantage of trading using opposite Bank of America and Jerónimo Martins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Jerónimo Martins 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 Jerónimo Martins will offset losses from the drop in Jerónimo Martins' long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Canadian Imperial Bank | Bank of America vs. Bank of Montreal |
| Jerónimo Martins vs. Nanjing Panda Electronics | Jerónimo Martins vs. KIMBALL ELECTRONICS | Jerónimo Martins vs. Meiko Electronics Co | Jerónimo Martins vs. Tsingtao Brewery |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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