Correlation Between Bank of America and Rohm Co
Can any of the company-specific risk be diversified away by investing in both Bank of America and Rohm Co 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 Rohm Co 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 Rohm Co Ltd, you can compare the effects of market volatilities on Bank of America and Rohm Co 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 Rohm Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Rohm Co.
Diversification Opportunities for Bank of America and Rohm Co
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Rohm is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Rohm Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rohm Co 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 Rohm Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rohm Co has no effect on the direction of Bank of America i.e., Bank of America and Rohm Co go up and down completely randomly.
Pair Corralation between Bank of America and Rohm Co
Considering the 90-day investment horizon Bank of America is expected to generate 0.86 times more return on investment than Rohm Co. However, Bank of America is 1.16 times less risky than Rohm Co. It trades about 0.22 of its potential returns per unit of risk. Rohm Co Ltd is currently generating about -0.31 per unit of risk. If you would invest 4,265 in Bank of America on August 25, 2024 and sell it today you would earn a total of 435.00 from holding Bank of America or generate 10.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Rohm Co Ltd
Performance |
| Timeline |
| Bank of America |
| Rohm Co |
Bank of America and Rohm Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Rohm Co
The main advantage of trading using opposite Bank of America and Rohm Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Rohm Co 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 Rohm Co will offset losses from the drop in Rohm Co's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Canadian Imperial Bank |
| Rohm Co vs. Renesas Electronics | Rohm Co vs. Power Integrations | Rohm Co vs. MACOM Technology Solutions | Rohm Co vs. Renesas Electronics Corp |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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