Correlation Between Bank of America and Softwareone Holding
Can any of the company-specific risk be diversified away by investing in both Bank of America and Softwareone Holding 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 Softwareone Holding 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 Softwareone Holding, you can compare the effects of market volatilities on Bank of America and Softwareone Holding 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 Softwareone Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Softwareone Holding.
Diversification Opportunities for Bank of America and Softwareone Holding
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Softwareone is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Softwareone Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Softwareone Holding 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 Softwareone Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Softwareone Holding has no effect on the direction of Bank of America i.e., Bank of America and Softwareone Holding go up and down completely randomly.
Pair Corralation between Bank of America and Softwareone Holding
Considering the 90-day investment horizon Bank of America is expected to generate 0.22 times more return on investment than Softwareone Holding. However, Bank of America is 4.6 times less risky than Softwareone Holding. It trades about 0.26 of its potential returns per unit of risk. Softwareone Holding is currently generating about -0.18 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Softwareone Holding
Performance |
| Timeline |
| Bank of America |
| Softwareone Holding |
Bank of America and Softwareone Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Softwareone Holding
The main advantage of trading using opposite Bank of America and Softwareone Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Softwareone Holding 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 Softwareone Holding will offset losses from the drop in Softwareone Holding's 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 |
| Softwareone Holding vs. Logitech International SA | Softwareone Holding vs. VAT Group AG | Softwareone Holding vs. Stadler Rail AG | Softwareone Holding vs. Cembra Money Bank |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |