Correlation Between Bank of America and Klil Industries
Can any of the company-specific risk be diversified away by investing in both Bank of America and Klil Industries 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 Klil Industries 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 Klil Industries, you can compare the effects of market volatilities on Bank of America and Klil Industries 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 Klil Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Klil Industries.
Diversification Opportunities for Bank of America and Klil Industries
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Klil is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Klil Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klil Industries 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 Klil Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klil Industries has no effect on the direction of Bank of America i.e., Bank of America and Klil Industries go up and down completely randomly.
Pair Corralation between Bank of America and Klil Industries
Considering the 90-day investment horizon Bank of America is expected to generate 2.78 times less return on investment than Klil Industries. But when comparing it to its historical volatility, Bank of America is 1.91 times less risky than Klil Industries. It trades about 0.1 of its potential returns per unit of risk. Klil Industries is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,998,000 in Klil Industries on September 3, 2024 and sell it today you would earn a total of 922,000 from holding Klil Industries or generate 46.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 75.2% |
| Values | Daily Returns |
Bank of America vs. Klil Industries
Performance |
| Timeline |
| Bank of America |
| Klil Industries |
Bank of America and Klil Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Klil Industries
The main advantage of trading using opposite Bank of America and Klil Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Klil Industries 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 Klil Industries will offset losses from the drop in Klil Industries' long position.| Bank of America vs. Partner Communications | Bank of America vs. Merck Company | Bank of America vs. Western Midstream Partners | Bank of America vs. Edgewise Therapeutics |
| Klil Industries vs. Scope Metals Group | Klil Industries vs. Inrom Construction Industries | Klil Industries vs. Elbit Systems | Klil Industries vs. Rami Levi |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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