Correlation Between Bank of America and Teuza A
Can any of the company-specific risk be diversified away by investing in both Bank of America and Teuza A 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 Teuza A 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 Teuza A Fairchild, you can compare the effects of market volatilities on Bank of America and Teuza A 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 Teuza A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Teuza A.
Diversification Opportunities for Bank of America and Teuza A
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Teuza is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Teuza A Fairchild in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teuza A Fairchild 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 Teuza A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teuza A Fairchild has no effect on the direction of Bank of America i.e., Bank of America and Teuza A go up and down completely randomly.
Pair Corralation between Bank of America and Teuza A
Considering the 90-day investment horizon Bank of America is expected to generate 0.39 times more return on investment than Teuza A. However, Bank of America is 2.56 times less risky than Teuza A. It trades about 0.26 of its potential returns per unit of risk. Teuza A Fairchild is currently generating about -0.05 per unit of risk. If you would invest 3,968 in Bank of America on August 29, 2024 and sell it today you would earn a total of 817.50 from holding Bank of America or generate 20.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 65.12% |
| Values | Daily Returns |
Bank of America vs. Teuza A Fairchild
Performance |
| Timeline |
| Bank of America |
| Teuza A Fairchild |
Bank of America and Teuza A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Teuza A
The main advantage of trading using opposite Bank of America and Teuza A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Teuza A 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 Teuza A will offset losses from the drop in Teuza A's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. JPMorgan Chase Co |
| Teuza A vs. Elbit Systems | Teuza A vs. Discount Investment Corp | Teuza A vs. Clal Insurance Enterprises | Teuza A vs. AudioCodes |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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