Correlation Between Bank of America and Vastland Indonesia
Can any of the company-specific risk be diversified away by investing in both Bank of America and Vastland Indonesia 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 Vastland Indonesia 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 Vastland Indonesia, you can compare the effects of market volatilities on Bank of America and Vastland Indonesia 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 Vastland Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Vastland Indonesia.
Diversification Opportunities for Bank of America and Vastland Indonesia
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bank and Vastland is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Vastland Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vastland Indonesia 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 Vastland Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vastland Indonesia has no effect on the direction of Bank of America i.e., Bank of America and Vastland Indonesia go up and down completely randomly.
Pair Corralation between Bank of America and Vastland Indonesia
Considering the 90-day investment horizon Bank of America is expected to under-perform the Vastland Indonesia. But the stock apears to be less risky and, when comparing its historical volatility, Bank of America is 6.34 times less risky than Vastland Indonesia. The stock trades about -0.34 of its potential returns per unit of risk. The Vastland Indonesia is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 7,500 in Vastland Indonesia on November 28, 2024 and sell it today you would earn a total of 1,500 from holding Vastland Indonesia or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 86.36% |
| Values | Daily Returns |
Bank of America vs. Vastland Indonesia
Performance |
| Timeline |
| Bank of America |
| Vastland Indonesia |
Bank of America and Vastland Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Vastland Indonesia
The main advantage of trading using opposite Bank of America and Vastland Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Vastland Indonesia 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 Vastland Indonesia will offset losses from the drop in Vastland Indonesia's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
| Vastland Indonesia vs. Tridomain Performance Materials | Vastland Indonesia vs. Trinitan Metals and | Vastland Indonesia vs. Garuda Metalindo Tbk | Vastland Indonesia vs. Alumindo Light Metal |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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