Correlation Between Bank of America and Orange SA
Can any of the company-specific risk be diversified away by investing in both Bank of America and Orange SA 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 Orange SA 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 Orange SA ADR, you can compare the effects of market volatilities on Bank of America and Orange SA 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 Orange SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Orange SA.
Diversification Opportunities for Bank of America and Orange SA
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Orange is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Orange SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange SA ADR 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 Orange SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orange SA ADR has no effect on the direction of Bank of America i.e., Bank of America and Orange SA go up and down completely randomly.
Pair Corralation between Bank of America and Orange SA
Considering the 90-day investment horizon Bank of America is expected to generate 1.51 times more return on investment than Orange SA. However, Bank of America is 1.51 times more volatile than Orange SA ADR. It trades about 0.06 of its potential returns per unit of risk. Orange SA ADR is currently generating about 0.04 per unit of risk. If you would invest 3,079 in Bank of America on August 30, 2024 and sell it today you would earn a total of 1,698 from holding Bank of America or generate 55.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Orange SA ADR
Performance |
| Timeline |
| Bank of America |
| Orange SA ADR |
Bank of America and Orange SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Orange SA
The main advantage of trading using opposite Bank of America and Orange SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Orange SA 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 Orange SA will offset losses from the drop in Orange SA's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings |
| Orange SA vs. Telefonica Brasil SA | Orange SA vs. Vodafone Group PLC | Orange SA vs. Grupo Televisa SAB | Orange SA vs. America Movil SAB |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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