Correlation Between Bank of America and Union Electric
Can any of the company-specific risk be diversified away by investing in both Bank of America and Union Electric 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 Union Electric 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 Union Electric, you can compare the effects of market volatilities on Bank of America and Union Electric 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 Union Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Union Electric.
Diversification Opportunities for Bank of America and Union Electric
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Union is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Union Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Electric 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 Union Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Electric has no effect on the direction of Bank of America i.e., Bank of America and Union Electric go up and down completely randomly.
Pair Corralation between Bank of America and Union Electric
Considering the 90-day investment horizon Bank of America is expected to generate 1.81 times less return on investment than Union Electric. But when comparing it to its historical volatility, Bank of America is 3.08 times less risky than Union Electric. It trades about 0.06 of its potential returns per unit of risk. Union Electric is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 9,224 in Union Electric on September 3, 2024 and sell it today you would earn a total of 1,776 from holding Union Electric or generate 19.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 69.49% |
| Values | Daily Returns |
Bank of America vs. Union Electric
Performance |
| Timeline |
| Bank of America |
| Union Electric |
Bank of America and Union Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Union Electric
The main advantage of trading using opposite Bank of America and Union Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Union Electric 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 Union Electric will offset losses from the drop in Union Electric's long position.| Bank of America vs. Partner Communications | Bank of America vs. Merck Company | Bank of America vs. Western Midstream Partners | Bank of America vs. Edgewise Therapeutics |
| Union Electric vs. Suburban Propane Partners | Union Electric vs. SunOpta | Union Electric vs. Kinetik Holdings | Union Electric vs. Bridgford Foods |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |