Correlation Between Bank of America and Quilter PLC
Can any of the company-specific risk be diversified away by investing in both Bank of America and Quilter 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 Quilter 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 Quilter PLC, you can compare the effects of market volatilities on Bank of America and Quilter 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 Quilter PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Quilter PLC.
Diversification Opportunities for Bank of America and Quilter PLC
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bank and Quilter is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Quilter PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quilter 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 Quilter PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quilter PLC has no effect on the direction of Bank of America i.e., Bank of America and Quilter PLC go up and down completely randomly.
Pair Corralation between Bank of America and Quilter PLC
Considering the 90-day investment horizon Bank of America is expected to generate 2.33 times less return on investment than Quilter PLC. But when comparing it to its historical volatility, Bank of America is 1.92 times less risky than Quilter PLC. It trades about 0.09 of its potential returns per unit of risk. Quilter PLC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 15,480 in Quilter PLC on November 5, 2024 and sell it today you would earn a total of 730.00 from holding Quilter PLC or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Bank of America vs. Quilter PLC
Performance |
| Timeline |
| Bank of America |
| Quilter PLC |
Bank of America and Quilter PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Quilter PLC
The main advantage of trading using opposite Bank of America and Quilter PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Quilter 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 Quilter PLC will offset losses from the drop in Quilter PLC's long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Royal Bank of | Bank of America vs. Canadian Imperial Bank |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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