Correlation Between Bank of America and Univar
Can any of the company-specific risk be diversified away by investing in both Bank of America and Univar 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 Univar 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 Univar Inc, you can compare the effects of market volatilities on Bank of America and Univar 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 Univar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Univar.
Diversification Opportunities for Bank of America and Univar
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Univar is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Univar Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Univar Inc 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 Univar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Univar Inc has no effect on the direction of Bank of America i.e., Bank of America and Univar go up and down completely randomly.
Pair Corralation between Bank of America and Univar
Considering the 90-day investment horizon Bank of America is expected to generate 8.67 times more return on investment than Univar. However, Bank of America is 8.67 times more volatile than Univar Inc. It trades about 0.09 of its potential returns per unit of risk. Univar Inc is currently generating about 0.2 per unit of risk. If you would invest 2,737 in Bank of America on August 24, 2024 and sell it today you would earn a total of 1,963 from holding Bank of America or generate 71.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 18.55% |
| Values | Daily Returns |
Bank of America vs. Univar Inc
Performance |
| Timeline |
| Bank of America |
| Univar Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank of America and Univar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Univar
The main advantage of trading using opposite Bank of America and Univar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Univar 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 Univar will offset losses from the drop in Univar's 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 |
| Univar vs. Valhi Inc | Univar vs. Huntsman | Univar vs. Lsb Industries | Univar vs. Westlake Chemical Partners |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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