Correlation Between Bank of America and Banco Pine
Can any of the company-specific risk be diversified away by investing in both Bank of America and Banco Pine 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 Banco Pine 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 Banco Pine SA, you can compare the effects of market volatilities on Bank of America and Banco Pine 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 Banco Pine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Banco Pine.
Diversification Opportunities for Bank of America and Banco Pine
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bank and Banco is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Banco Pine SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Pine 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 Banco Pine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Pine SA has no effect on the direction of Bank of America i.e., Bank of America and Banco Pine go up and down completely randomly.
Pair Corralation between Bank of America and Banco Pine
Considering the 90-day investment horizon Bank of America is expected to generate 2.21 times less return on investment than Banco Pine. But when comparing it to its historical volatility, Bank of America is 1.79 times less risky than Banco Pine. It trades about 0.18 of its potential returns per unit of risk. Banco Pine SA is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 399.00 in Banco Pine SA on October 26, 2024 and sell it today you would earn a total of 41.00 from holding Banco Pine SA or generate 10.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.0% |
| Values | Daily Returns |
Bank of America vs. Banco Pine SA
Performance |
| Timeline |
| Bank of America |
| Banco Pine SA |
Bank of America and Banco Pine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Banco Pine
The main advantage of trading using opposite Bank of America and Banco Pine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Banco Pine 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 Banco Pine will offset losses from the drop in Banco Pine's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC |
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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