Correlation Between Bank of America and Logility
Can any of the company-specific risk be diversified away by investing in both Bank of America and Logility 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 Logility 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 Logility, you can compare the effects of market volatilities on Bank of America and Logility 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 Logility. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Logility.
Diversification Opportunities for Bank of America and Logility
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bank and Logility is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Logility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logility 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 Logility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logility has no effect on the direction of Bank of America i.e., Bank of America and Logility go up and down completely randomly.
Pair Corralation between Bank of America and Logility
Considering the 90-day investment horizon Bank of America is expected to generate 0.71 times more return on investment than Logility. However, Bank of America is 1.41 times less risky than Logility. It trades about 0.16 of its potential returns per unit of risk. Logility is currently generating about -0.02 per unit of risk. If you would invest 4,044 in Bank of America on September 2, 2024 and sell it today you would earn a total of 707.00 from holding Bank of America or generate 17.48% 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. Logility
Performance |
| Timeline |
| Bank of America |
| Logility |
Bank of America and Logility Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Logility
The main advantage of trading using opposite Bank of America and Logility positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Logility 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 Logility will offset losses from the drop in Logility's long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Logility vs. Corporacion America Airports | Logility vs. EvoAir Holdings | Logility vs. Summit Hotel Properties | Logility vs. Alvarium Tiedemann Holdings |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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