Correlation Between Bank of America and RTL Group
Can any of the company-specific risk be diversified away by investing in both Bank of America and RTL Group 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 RTL Group 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 RTL Group SA, you can compare the effects of market volatilities on Bank of America and RTL Group 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 RTL Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and RTL Group.
Diversification Opportunities for Bank of America and RTL Group
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and RTL is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and RTL Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTL Group 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 RTL Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTL Group SA has no effect on the direction of Bank of America i.e., Bank of America and RTL Group go up and down completely randomly.
Pair Corralation between Bank of America and RTL Group
Considering the 90-day investment horizon Bank of America is expected to generate 1.56 times less return on investment than RTL Group. But when comparing it to its historical volatility, Bank of America is 4.23 times less risky than RTL Group. It trades about 0.05 of its potential returns per unit of risk. RTL Group SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 407.00 in RTL Group SA on August 24, 2024 and sell it today you would lose (110.00) from holding RTL Group SA or give up 27.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 72.98% |
| Values | Daily Returns |
Bank of America vs. RTL Group SA
Performance |
| Timeline |
| Bank of America |
| RTL Group SA |
Bank of America and RTL Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and RTL Group
The main advantage of trading using opposite Bank of America and RTL Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, RTL Group 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 RTL Group will offset losses from the drop in RTL Group's long position.| Bank of America vs. Amtech Systems | Bank of America vs. Gold Fields Ltd | Bank of America vs. Aegean Airlines SA | Bank of America vs. Merck Company |
| RTL Group vs. ITV PLC ADR | RTL Group vs. iHeartMedia | RTL Group vs. ProSiebenSat1 Media AG | RTL Group vs. TV Azteca 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |