Correlation Between Bank of America and Tyler Technologies
Can any of the company-specific risk be diversified away by investing in both Bank of America and Tyler Technologies 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 Tyler Technologies 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 Tyler Technologies, you can compare the effects of market volatilities on Bank of America and Tyler Technologies 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 Tyler Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Tyler Technologies.
Diversification Opportunities for Bank of America and Tyler Technologies
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Tyler is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Tyler Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyler Technologies 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 Tyler Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tyler Technologies has no effect on the direction of Bank of America i.e., Bank of America and Tyler Technologies go up and down completely randomly.
Pair Corralation between Bank of America and Tyler Technologies
Considering the 90-day investment horizon Bank of America is expected to generate 1.64 times less return on investment than Tyler Technologies. But when comparing it to its historical volatility, Bank of America is 1.02 times less risky than Tyler Technologies. It trades about 0.05 of its potential returns per unit of risk. Tyler Technologies is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 32,351 in Tyler Technologies on August 24, 2024 and sell it today you would earn a total of 28,490 from holding Tyler Technologies or generate 88.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Tyler Technologies
Performance |
| Timeline |
| Bank of America |
| Tyler Technologies |
Bank of America and Tyler Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Tyler Technologies
The main advantage of trading using opposite Bank of America and Tyler Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Tyler Technologies 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 Tyler Technologies will offset losses from the drop in Tyler Technologies' long position.| Bank of America vs. Amtech Systems | Bank of America vs. Gold Fields Ltd | Bank of America vs. Aegean Airlines SA | Bank of America vs. Merck Company |
| Tyler Technologies vs. Alkami Technology | Tyler Technologies vs. Paycor HCM | Tyler Technologies vs. Procore Technologies | Tyler Technologies vs. Enfusion |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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