Correlation Between Bank of America and Knightscope
Can any of the company-specific risk be diversified away by investing in both Bank of America and Knightscope 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 Knightscope 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 Knightscope, you can compare the effects of market volatilities on Bank of America and Knightscope 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 Knightscope. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Knightscope.
Diversification Opportunities for Bank of America and Knightscope
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Knightscope is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Knightscope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knightscope 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 Knightscope. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knightscope has no effect on the direction of Bank of America i.e., Bank of America and Knightscope go up and down completely randomly.
Pair Corralation between Bank of America and Knightscope
Considering the 90-day investment horizon Bank of America is expected to generate 1.14 times less return on investment than Knightscope. But when comparing it to its historical volatility, Bank of America is 6.37 times less risky than Knightscope. It trades about 0.29 of its potential returns per unit of risk. Knightscope is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,803 in Knightscope on August 31, 2024 and sell it today you would lose (67.00) from holding Knightscope or give up 3.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Knightscope
Performance |
| Timeline |
| Bank of America |
| Knightscope |
Bank of America and Knightscope Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Knightscope
The main advantage of trading using opposite Bank of America and Knightscope positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Knightscope 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 Knightscope will offset losses from the drop in Knightscope's long position.| Bank of America vs. RLJ Lodging Trust | Bank of America vs. Aquagold International | Bank of America vs. Stepstone Group | Bank of America vs. Morningstar Unconstrained Allocation |
| Knightscope vs. LogicMark | Knightscope vs. Guardforce AI Co | Knightscope vs. Bridger Aerospace Group | Knightscope vs. Iveda Solutions |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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