Correlation Between Bank of America and Lea Bank
Can any of the company-specific risk be diversified away by investing in both Bank of America and Lea Bank 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 Lea Bank 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 Lea Bank ASA, you can compare the effects of market volatilities on Bank of America and Lea Bank 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 Lea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Lea Bank.
Diversification Opportunities for Bank of America and Lea Bank
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Lea is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Lea Bank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lea Bank ASA 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 Lea Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lea Bank ASA has no effect on the direction of Bank of America i.e., Bank of America and Lea Bank go up and down completely randomly.
Pair Corralation between Bank of America and Lea Bank
Considering the 90-day investment horizon Bank of America is expected to generate 0.81 times more return on investment than Lea Bank. However, Bank of America is 1.23 times less risky than Lea Bank. It trades about 0.31 of its potential returns per unit of risk. Lea Bank ASA is currently generating about 0.2 per unit of risk. If you would invest 4,182 in Bank of America on September 1, 2024 and sell it today you would earn a total of 569.00 from holding Bank of America or generate 13.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of America vs. Lea Bank ASA
Performance |
| Timeline |
| Bank of America |
| Lea Bank ASA |
Bank of America and Lea Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Lea Bank
The main advantage of trading using opposite Bank of America and Lea Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Lea Bank 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 Lea Bank will offset losses from the drop in Lea Bank's long position.| Bank of America vs. Citigroup | Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC |
| Lea Bank vs. Grong Sparebank | Lea Bank vs. Austevoll Seafood ASA | Lea Bank vs. SD Standard Drilling | Lea Bank vs. NorAm Drilling AS |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |