Correlation Between Bank of America and UNIV HEALTH
Can any of the company-specific risk be diversified away by investing in both Bank of America and UNIV HEALTH 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 UNIV HEALTH 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 UNIV HEALTH SERV B, you can compare the effects of market volatilities on Bank of America and UNIV HEALTH 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 UNIV HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and UNIV HEALTH.
Diversification Opportunities for Bank of America and UNIV HEALTH
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and UNIV is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and UNIV HEALTH SERV B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIV HEALTH SERV 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 UNIV HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIV HEALTH SERV has no effect on the direction of Bank of America i.e., Bank of America and UNIV HEALTH go up and down completely randomly.
Pair Corralation between Bank of America and UNIV HEALTH
Considering the 90-day investment horizon Bank of America is expected to generate 1.08 times more return on investment than UNIV HEALTH. However, Bank of America is 1.08 times more volatile than UNIV HEALTH SERV B. It trades about 0.24 of its potential returns per unit of risk. UNIV HEALTH SERV B is currently generating about 0.0 per unit of risk. If you would invest 4,262 in Bank of America on August 27, 2024 and sell it today you would earn a total of 438.00 from holding Bank of America or generate 10.28% 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. UNIV HEALTH SERV B
Performance |
| Timeline |
| Bank of America |
| UNIV HEALTH SERV |
Bank of America and UNIV HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and UNIV HEALTH
The main advantage of trading using opposite Bank of America and UNIV HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, UNIV HEALTH 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 UNIV HEALTH will offset losses from the drop in UNIV HEALTH's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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