Correlation Between Bank of America and Japan Exchange
Can any of the company-specific risk be diversified away by investing in both Bank of America and Japan Exchange 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 Japan Exchange 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 Japan Exchange Group, you can compare the effects of market volatilities on Bank of America and Japan Exchange 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 Japan Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Japan Exchange.
Diversification Opportunities for Bank of America and Japan Exchange
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and Japan is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Japan Exchange Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Exchange Group 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 Japan Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Exchange Group has no effect on the direction of Bank of America i.e., Bank of America and Japan Exchange go up and down completely randomly.
Pair Corralation between Bank of America and Japan Exchange
Considering the 90-day investment horizon Bank of America is expected to generate 1.53 times less return on investment than Japan Exchange. But when comparing it to its historical volatility, Bank of America is 1.04 times less risky than Japan Exchange. It trades about 0.05 of its potential returns per unit of risk. Japan Exchange Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 707.00 in Japan Exchange Group on August 27, 2024 and sell it today you would earn a total of 453.00 from holding Japan Exchange Group or generate 64.07% 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. Japan Exchange Group
Performance |
| Timeline |
| Bank of America |
| Japan Exchange Group |
Bank of America and Japan Exchange Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Japan Exchange
The main advantage of trading using opposite Bank of America and Japan Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Japan Exchange 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 Japan Exchange will offset losses from the drop in Japan Exchange's long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal | Bank of America vs. Bank of Nova |
| Japan Exchange vs. Hong Kong Exchanges | Japan Exchange vs. Deutsche Boerse AG | Japan Exchange vs. SP Global | Japan Exchange vs. Moodys |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |