Correlation Between Bank of America and Lagardere
Can any of the company-specific risk be diversified away by investing in both Bank of America and Lagardere 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 Lagardere 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 Lagardere SA, you can compare the effects of market volatilities on Bank of America and Lagardere 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 Lagardere. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Lagardere.
Diversification Opportunities for Bank of America and Lagardere
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Lagardere is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Lagardere SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lagardere SA 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 Lagardere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lagardere SA has no effect on the direction of Bank of America i.e., Bank of America and Lagardere go up and down completely randomly.
Pair Corralation between Bank of America and Lagardere
Considering the 90-day investment horizon Bank of America is expected to generate 1.07 times more return on investment than Lagardere. However, Bank of America is 1.07 times more volatile than Lagardere SA. It trades about 0.1 of its potential returns per unit of risk. Lagardere SA is currently generating about 0.0 per unit of risk. If you would invest 2,720 in Bank of America on September 14, 2024 and sell it today you would earn a total of 1,888 from holding Bank of America or generate 69.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 58.52% |
| Values | Daily Returns |
Bank of America vs. Lagardere SA
Performance |
| Timeline |
| Bank of America |
| Lagardere SA |
Bank of America and Lagardere Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Lagardere
The main advantage of trading using opposite Bank of America and Lagardere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Lagardere 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 Lagardere will offset losses from the drop in Lagardere's long position.The idea behind Bank of America and Lagardere SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lagardere vs. Stratasys | Lagardere vs. Zoom Video Communications | Lagardere vs. Iridium Communications | Lagardere vs. Eldorado Gold Corp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| CEOs Directory Screen CEOs from public companies around the world |