Correlation Between Bank of America and Plaza Centers
Can any of the company-specific risk be diversified away by investing in both Bank of America and Plaza Centers 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 Plaza Centers 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 Plaza Centers NV, you can compare the effects of market volatilities on Bank of America and Plaza Centers 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 Plaza Centers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Plaza Centers.
Diversification Opportunities for Bank of America and Plaza Centers
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Plaza is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Plaza Centers NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plaza Centers NV 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 Plaza Centers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plaza Centers NV has no effect on the direction of Bank of America i.e., Bank of America and Plaza Centers go up and down completely randomly.
Pair Corralation between Bank of America and Plaza Centers
Considering the 90-day investment horizon Bank of America is expected to generate 0.56 times more return on investment than Plaza Centers. However, Bank of America is 1.77 times less risky than Plaza Centers. It trades about 0.12 of its potential returns per unit of risk. Plaza Centers NV is currently generating about -0.12 per unit of risk. If you would invest 3,495 in Bank of America on September 1, 2024 and sell it today you would earn a total of 1,256 from holding Bank of America or generate 35.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
Bank of America vs. Plaza Centers NV
Performance |
| Timeline |
| Bank of America |
| Plaza Centers NV |
Bank of America and Plaza Centers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Plaza Centers
The main advantage of trading using opposite Bank of America and Plaza Centers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Plaza Centers 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 Plaza Centers will offset losses from the drop in Plaza Centers' 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 |
| Plaza Centers vs. Impax Environmental Markets | Plaza Centers vs. Naked Wines plc | Plaza Centers vs. Beeks Trading | Plaza Centers vs. Lowland Investment Co |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |