Correlation Between Bank of America and London Security
Can any of the company-specific risk be diversified away by investing in both Bank of America and London Security 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 London Security 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 London Security Plc, you can compare the effects of market volatilities on Bank of America and London Security 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 London Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and London Security.
Diversification Opportunities for Bank of America and London Security
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and London is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and London Security Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on London Security Plc 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 London Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of London Security Plc has no effect on the direction of Bank of America i.e., Bank of America and London Security go up and down completely randomly.
Pair Corralation between Bank of America and London Security
Considering the 90-day investment horizon Bank of America is expected to generate 1.17 times more return on investment than London Security. However, Bank of America is 1.17 times more volatile than London Security Plc. It trades about 0.1 of its potential returns per unit of risk. London Security Plc is currently generating about 0.06 per unit of risk. If you would invest 3,938 in Bank of America on September 1, 2024 and sell it today you would earn a total of 813.00 from holding Bank of America or generate 20.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 96.92% |
| Values | Daily Returns |
Bank of America vs. London Security Plc
Performance |
| Timeline |
| Bank of America |
| London Security Plc |
Bank of America and London Security Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and London Security
The main advantage of trading using opposite Bank of America and London Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, London Security 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 London Security will offset losses from the drop in London Security'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 |
| London Security vs. Samsung Electronics Co | London Security vs. Samsung Electronics Co | London Security vs. Hyundai Motor | London Security vs. Toyota Motor 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |