Correlation Between Bank of America and Pearson Plc
Can any of the company-specific risk be diversified away by investing in both Bank of America and Pearson Plc 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 Pearson Plc 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 Pearson Plc, you can compare the effects of market volatilities on Bank of America and Pearson Plc 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 Pearson Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Pearson Plc.
Diversification Opportunities for Bank of America and Pearson Plc
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Pearson is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Pearson Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pearson 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 Pearson Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pearson Plc has no effect on the direction of Bank of America i.e., Bank of America and Pearson Plc go up and down completely randomly.
Pair Corralation between Bank of America and Pearson Plc
If you would invest 3,265 in Bank of America on November 9, 2024 and sell it today you would earn a total of 1,509 from holding Bank of America or generate 46.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Bank of America vs. Pearson Plc
Performance |
| Timeline |
| Bank of America |
| Pearson Plc |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Bank of America and Pearson Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Pearson Plc
The main advantage of trading using opposite Bank of America and Pearson Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Pearson Plc 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 Pearson Plc will offset losses from the drop in Pearson Plc's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
| Pearson Plc vs. John Wiley Sons | Pearson Plc vs. Scholastic | Pearson Plc vs. Pearson PLC ADR | Pearson Plc vs. New York Times |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |