Correlation Between Bank of America and Singapore Airlines
Can any of the company-specific risk be diversified away by investing in both Bank of America and Singapore Airlines 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 Singapore Airlines 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 Singapore Airlines Limited, you can compare the effects of market volatilities on Bank of America and Singapore Airlines 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 Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Singapore Airlines.
Diversification Opportunities for Bank of America and Singapore Airlines
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and Singapore is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Singapore Airlines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines 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 Singapore Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Airlines has no effect on the direction of Bank of America i.e., Bank of America and Singapore Airlines go up and down completely randomly.
Pair Corralation between Bank of America and Singapore Airlines
Considering the 90-day investment horizon Bank of America is expected to generate 1.39 times more return on investment than Singapore Airlines. However, Bank of America is 1.39 times more volatile than Singapore Airlines Limited. It trades about 0.26 of its potential returns per unit of risk. Singapore Airlines Limited is currently generating about 0.0 per unit of risk. If you would invest 4,262 in Bank of America on August 28, 2024 and sell it today you would earn a total of 488.00 from holding Bank of America or generate 11.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Singapore Airlines Limited
Performance |
| Timeline |
| Bank of America |
| Singapore Airlines |
Bank of America and Singapore Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Singapore Airlines
The main advantage of trading using opposite Bank of America and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Singapore Airlines 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 Singapore Airlines will offset losses from the drop in Singapore Airlines' long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal | Bank of America vs. Bank of Nova |
| Singapore Airlines vs. ANTA SPORTS PRODUCT | Singapore Airlines vs. Daido Steel Co | Singapore Airlines vs. BLUESCOPE STEEL | Singapore Airlines vs. Perma Fix Environmental Services |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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