Correlation Between Bank of America and Kingboard Chemical
Can any of the company-specific risk be diversified away by investing in both Bank of America and Kingboard Chemical 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 Kingboard Chemical 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 Kingboard Chemical Holdings, you can compare the effects of market volatilities on Bank of America and Kingboard Chemical 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 Kingboard Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Kingboard Chemical.
Diversification Opportunities for Bank of America and Kingboard Chemical
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bank and Kingboard is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Kingboard Chemical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingboard Chemical 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 Kingboard Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingboard Chemical has no effect on the direction of Bank of America i.e., Bank of America and Kingboard Chemical go up and down completely randomly.
Pair Corralation between Bank of America and Kingboard Chemical
If you would invest 4,438 in Bank of America on October 25, 2024 and sell it today you would earn a total of 141.00 from holding Bank of America or generate 3.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Kingboard Chemical Holdings
Performance |
| Timeline |
| Bank of America |
| Kingboard Chemical |
Bank of America and Kingboard Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Kingboard Chemical
The main advantage of trading using opposite Bank of America and Kingboard Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Kingboard Chemical 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 Kingboard Chemical will offset losses from the drop in Kingboard Chemical's long position.| Bank of America vs. JPMorgan Chase Co | Bank of America vs. Bank of America | Bank of America vs. RLJ Lodging Trust | Bank of America vs. PennyMac Finl Svcs |
| Kingboard Chemical vs. Western Digital | Kingboard Chemical vs. Asbury Automotive Group | Kingboard Chemical vs. Molecular Partners AG | Kingboard Chemical vs. Valneva SE ADR |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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