Correlation Between Bank of America and Deutsche Enhanced
Can any of the company-specific risk be diversified away by investing in both Bank of America and Deutsche Enhanced 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 Deutsche Enhanced 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 Deutsche Enhanced Emerging, you can compare the effects of market volatilities on Bank of America and Deutsche Enhanced 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 Deutsche Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Deutsche Enhanced.
Diversification Opportunities for Bank of America and Deutsche Enhanced
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Deutsche is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Deutsche Enhanced Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Enhanced 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 Deutsche Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Enhanced has no effect on the direction of Bank of America i.e., Bank of America and Deutsche Enhanced go up and down completely randomly.
Pair Corralation between Bank of America and Deutsche Enhanced
Considering the 90-day investment horizon Bank of America is expected to generate 4.43 times more return on investment than Deutsche Enhanced. However, Bank of America is 4.43 times more volatile than Deutsche Enhanced Emerging. It trades about 0.06 of its potential returns per unit of risk. Deutsche Enhanced Emerging is currently generating about 0.12 per unit of risk. If you would invest 3,085 in Bank of America on August 29, 2024 and sell it today you would earn a total of 1,692 from holding Bank of America or generate 54.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Deutsche Enhanced Emerging
Performance |
| Timeline |
| Bank of America |
| Deutsche Enhanced |
Bank of America and Deutsche Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Deutsche Enhanced
The main advantage of trading using opposite Bank of America and Deutsche Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Deutsche Enhanced 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 Deutsche Enhanced will offset losses from the drop in Deutsche Enhanced'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. JPMorgan Chase Co |
| Deutsche Enhanced vs. Heitman Real Estate | Deutsche Enhanced vs. Dunham Real Estate | Deutsche Enhanced vs. Teachers Insurance And | Deutsche Enhanced vs. Virtus Real Estate |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |