Correlation Between Bank of America and Sega Sammy
Can any of the company-specific risk be diversified away by investing in both Bank of America and Sega Sammy 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 Sega Sammy 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 Sega Sammy Holdings, you can compare the effects of market volatilities on Bank of America and Sega Sammy 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 Sega Sammy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Sega Sammy.
Diversification Opportunities for Bank of America and Sega Sammy
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Sega is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Sega Sammy Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sega Sammy Holdings 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 Sega Sammy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sega Sammy Holdings has no effect on the direction of Bank of America i.e., Bank of America and Sega Sammy go up and down completely randomly.
Pair Corralation between Bank of America and Sega Sammy
Considering the 90-day investment horizon Bank of America is expected to generate 1.08 times less return on investment than Sega Sammy. But when comparing it to its historical volatility, Bank of America is 1.85 times less risky than Sega Sammy. It trades about 0.1 of its potential returns per unit of risk. Sega Sammy Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 356.00 in Sega Sammy Holdings on August 31, 2024 and sell it today you would earn a total of 65.00 from holding Sega Sammy Holdings or generate 18.26% 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. Sega Sammy Holdings
Performance |
| Timeline |
| Bank of America |
| Sega Sammy Holdings |
Bank of America and Sega Sammy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Sega Sammy
The main advantage of trading using opposite Bank of America and Sega Sammy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Sega Sammy 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 Sega Sammy will offset losses from the drop in Sega Sammy's long position.| Bank of America vs. RLJ Lodging Trust | Bank of America vs. Aquagold International | Bank of America vs. Stepstone Group | Bank of America vs. Morningstar Unconstrained Allocation |
| Sega Sammy vs. Nexon Co Ltd | Sega Sammy vs. Square Enix Holdings | Sega Sammy vs. Nintendo Co | Sega Sammy vs. Square Enix Holdings |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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