Correlation Between Bank of America and Source JPX
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By analyzing existing cross correlation between Bank of America and Source JPX Nikkei 400, you can compare the effects of market volatilities on Bank of America and Source JPX 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 Source JPX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Source JPX.
Diversification Opportunities for Bank of America and Source JPX
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Source is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Source JPX Nikkei 400 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Source JPX Nikkei 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 Source JPX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Source JPX Nikkei has no effect on the direction of Bank of America i.e., Bank of America and Source JPX go up and down completely randomly.
Pair Corralation between Bank of America and Source JPX
Considering the 90-day investment horizon Bank of America is expected to generate 2.26 times more return on investment than Source JPX. However, Bank of America is 2.26 times more volatile than Source JPX Nikkei 400. It trades about 0.32 of its potential returns per unit of risk. Source JPX Nikkei 400 is currently generating about 0.0 per unit of risk. If you would invest 4,176 in Bank of America on September 2, 2024 and sell it today you would earn a total of 575.00 from holding Bank of America or generate 13.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of America vs. Source JPX Nikkei 400
Performance |
| Timeline |
| Bank of America |
| Source JPX Nikkei |
Bank of America and Source JPX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Source JPX
The main advantage of trading using opposite Bank of America and Source JPX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Source JPX 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 Source JPX will offset losses from the drop in Source JPX'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 |
| Source JPX vs. Source Markets plc | Source JPX vs. Source Markets plc | Source JPX vs. Source Markets plc | Source JPX vs. Source KBW NASDAQ |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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