Correlation Between Bank of America and AMAZON
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By analyzing existing cross correlation between Bank of America and AMAZON INC 405, you can compare the effects of market volatilities on Bank of America and AMAZON 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 AMAZON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and AMAZON.
Diversification Opportunities for Bank of America and AMAZON
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and AMAZON is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and AMAZON INC 405 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMAZON INC 405 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 AMAZON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMAZON INC 405 has no effect on the direction of Bank of America i.e., Bank of America and AMAZON go up and down completely randomly.
Pair Corralation between Bank of America and AMAZON
Considering the 90-day investment horizon Bank of America is expected to generate 1.37 times more return on investment than AMAZON. However, Bank of America is 1.37 times more volatile than AMAZON INC 405. It trades about 0.26 of its potential returns per unit of risk. AMAZON INC 405 is currently generating about 0.15 per unit of risk. If you would invest 4,262 in Bank of America on August 28, 2024 and sell it today you would earn a total of 488.00 from holding Bank of America or generate 11.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of America vs. AMAZON INC 405
Performance |
| Timeline |
| Bank of America |
| AMAZON INC 405 |
Bank of America and AMAZON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and AMAZON
The main advantage of trading using opposite Bank of America and AMAZON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, AMAZON 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 AMAZON will offset losses from the drop in AMAZON's long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal | Bank of America vs. Bank of Nova |
| AMAZON vs. The Coca Cola | AMAZON vs. JPMorgan Chase Co | AMAZON vs. Dupont De Nemours | AMAZON vs. Alcoa Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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