Correlation Between Bank of America and Tele2 AB
Can any of the company-specific risk be diversified away by investing in both Bank of America and Tele2 AB 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 Tele2 AB 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 Tele2 AB, you can compare the effects of market volatilities on Bank of America and Tele2 AB 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 Tele2 AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Tele2 AB.
Diversification Opportunities for Bank of America and Tele2 AB
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Tele2 is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Tele2 AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tele2 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 Tele2 AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tele2 AB has no effect on the direction of Bank of America i.e., Bank of America and Tele2 AB go up and down completely randomly.
Pair Corralation between Bank of America and Tele2 AB
Considering the 90-day investment horizon Bank of America is expected to generate 0.77 times more return on investment than Tele2 AB. However, Bank of America is 1.29 times less risky than Tele2 AB. It trades about 0.31 of its potential returns per unit of risk. Tele2 AB is currently generating about -0.01 per unit of risk. If you would invest 4,182 in Bank of America on September 1, 2024 and sell it today you would earn a total of 569.00 from holding Bank of America or generate 13.61% 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. Tele2 AB
Performance |
| Timeline |
| Bank of America |
| Tele2 AB |
Bank of America and Tele2 AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Tele2 AB
The main advantage of trading using opposite Bank of America and Tele2 AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Tele2 AB 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 Tele2 AB will offset losses from the drop in Tele2 AB's long position.| Bank of America vs. Citigroup | Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC |
| Tele2 AB vs. Proximus NV ADR | Tele2 AB vs. Telstra Limited | Tele2 AB vs. Singapore Telecommunications Limited | Tele2 AB vs. Vodafone Group PLC |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |