Correlation Between Bank of America and Shenzhen Investment
Can any of the company-specific risk be diversified away by investing in both Bank of America and Shenzhen Investment 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 Shenzhen Investment 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 Shenzhen Investment Bay, you can compare the effects of market volatilities on Bank of America and Shenzhen Investment 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 Shenzhen Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Shenzhen Investment.
Diversification Opportunities for Bank of America and Shenzhen Investment
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Shenzhen is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Shenzhen Investment Bay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Investment Bay 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 Shenzhen Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Investment Bay has no effect on the direction of Bank of America i.e., Bank of America and Shenzhen Investment go up and down completely randomly.
Pair Corralation between Bank of America and Shenzhen Investment
Considering the 90-day investment horizon Bank of America is expected to generate 3.26 times less return on investment than Shenzhen Investment. But when comparing it to its historical volatility, Bank of America is 4.99 times less risky than Shenzhen Investment. It trades about 0.1 of its potential returns per unit of risk. Shenzhen Investment Bay is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 191.00 in Shenzhen Investment Bay on September 1, 2024 and sell it today you would earn a total of 71.00 from holding Shenzhen Investment Bay or generate 37.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Bank of America vs. Shenzhen Investment Bay
Performance |
| Timeline |
| Bank of America |
| Shenzhen Investment Bay |
Bank of America and Shenzhen Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Shenzhen Investment
The main advantage of trading using opposite Bank of America and Shenzhen Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Shenzhen Investment 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 Shenzhen Investment will offset losses from the drop in Shenzhen Investment's long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Shenzhen Investment vs. Jiangsu Expressway Co | Shenzhen Investment vs. Jiangsu Expressway | Shenzhen Investment vs. Zhejiang Expressway Co | Shenzhen Investment vs. Yuexiu Transport Infrastructure |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |