Correlation Between Bank of America and DOLFINES
Can any of the company-specific risk be diversified away by investing in both Bank of America and DOLFINES 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 DOLFINES 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 DOLFINES SA EO, you can compare the effects of market volatilities on Bank of America and DOLFINES 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 DOLFINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and DOLFINES.
Diversification Opportunities for Bank of America and DOLFINES
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bank and DOLFINES is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and DOLFINES SA EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOLFINES SA EO 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 DOLFINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOLFINES SA EO has no effect on the direction of Bank of America i.e., Bank of America and DOLFINES go up and down completely randomly.
Pair Corralation between Bank of America and DOLFINES
Considering the 90-day investment horizon Bank of America is expected to generate 285.88 times less return on investment than DOLFINES. But when comparing it to its historical volatility, Bank of America is 86.03 times less risky than DOLFINES. It trades about 0.05 of its potential returns per unit of risk. DOLFINES SA EO is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,300 in DOLFINES SA EO on November 1, 2024 and sell it today you would lose (1,127) from holding DOLFINES SA EO or give up 86.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.17% |
| Values | Daily Returns |
Bank of America vs. DOLFINES SA EO
Performance |
| Timeline |
| Bank of America |
| DOLFINES SA EO |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Bank of America and DOLFINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and DOLFINES
The main advantage of trading using opposite Bank of America and DOLFINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, DOLFINES 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 DOLFINES will offset losses from the drop in DOLFINES's long position.| Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Canadian Imperial Bank |
| DOLFINES vs. Vishay Intertechnology | DOLFINES vs. COLUMBIA SPORTSWEAR | DOLFINES vs. PLAY2CHILL SA ZY | DOLFINES vs. Gaming and Leisure |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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