Correlation Between Bank of America and Tomra Systems
Can any of the company-specific risk be diversified away by investing in both Bank of America and Tomra Systems 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 Tomra Systems 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 Tomra Systems ASA, you can compare the effects of market volatilities on Bank of America and Tomra Systems 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 Tomra Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Tomra Systems.
Diversification Opportunities for Bank of America and Tomra Systems
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Tomra is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Tomra Systems ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tomra Systems ASA 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 Tomra Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tomra Systems ASA has no effect on the direction of Bank of America i.e., Bank of America and Tomra Systems go up and down completely randomly.
Pair Corralation between Bank of America and Tomra Systems
Considering the 90-day investment horizon Bank of America is expected to generate 0.64 times more return on investment than Tomra Systems. However, Bank of America is 1.55 times less risky than Tomra Systems. It trades about 0.31 of its potential returns per unit of risk. Tomra Systems ASA is currently generating about 0.0 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 | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Bank of America vs. Tomra Systems ASA
Performance |
| Timeline |
| Bank of America |
| Tomra Systems ASA |
Bank of America and Tomra Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Tomra Systems
The main advantage of trading using opposite Bank of America and Tomra Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Tomra Systems 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 Tomra Systems will offset losses from the drop in Tomra Systems' long position.| Bank of America vs. Citigroup | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of | Bank of America vs. JPMorgan Chase Co |
| Tomra Systems vs. Orkla ASA | Tomra Systems vs. Telenor ASA | Tomra Systems vs. Yara International ASA | Tomra Systems vs. SalMar ASA |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |