Correlation Between Bank of America and Safello Group
Can any of the company-specific risk be diversified away by investing in both Bank of America and Safello 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 Safello 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 Safello Group AB, you can compare the effects of market volatilities on Bank of America and Safello 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 Safello Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Safello Group.
Diversification Opportunities for Bank of America and Safello Group
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Safello is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Safello Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safello Group AB 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 Safello Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safello Group AB has no effect on the direction of Bank of America i.e., Bank of America and Safello Group go up and down completely randomly.
Pair Corralation between Bank of America and Safello Group
Considering the 90-day investment horizon Bank of America is expected to generate 2.46 times less return on investment than Safello Group. But when comparing it to its historical volatility, Bank of America is 3.56 times less risky than Safello Group. It trades about 0.06 of its potential returns per unit of risk. Safello Group AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 399.00 in Safello Group AB on September 3, 2024 and sell it today you would earn a total of 203.00 from holding Safello Group AB or generate 50.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.4% |
| Values | Daily Returns |
Bank of America vs. Safello Group AB
Performance |
| Timeline |
| Bank of America |
| Safello Group AB |
Bank of America and Safello Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Safello Group
The main advantage of trading using opposite Bank of America and Safello Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Safello 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 Safello Group will offset losses from the drop in Safello Group's long position.| Bank of America vs. Partner Communications | Bank of America vs. Merck Company | Bank of America vs. Western Midstream Partners | Bank of America vs. Edgewise Therapeutics |
| Safello Group vs. Goobit Group AB | Safello Group vs. CoinShares International | Safello Group vs. Zignsec AB | Safello Group vs. Checkin Group AB |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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