Correlation Between Bank of America and Valartis Group
Can any of the company-specific risk be diversified away by investing in both Bank of America and Valartis Group 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 Valartis Group 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 Valartis Group AG, you can compare the effects of market volatilities on Bank of America and Valartis Group 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 Valartis Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Valartis Group.
Diversification Opportunities for Bank of America and Valartis Group
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Valartis is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Valartis Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valartis Group AG 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 Valartis Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valartis Group AG has no effect on the direction of Bank of America i.e., Bank of America and Valartis Group go up and down completely randomly.
Pair Corralation between Bank of America and Valartis Group
Considering the 90-day investment horizon Bank of America is expected to generate 0.82 times more return on investment than Valartis Group. However, Bank of America is 1.22 times less risky than Valartis Group. It trades about 0.22 of its potential returns per unit of risk. Valartis Group AG is currently generating about -0.05 per unit of risk. If you would invest 4,265 in Bank of America on August 25, 2024 and sell it today you would earn a total of 435.00 from holding Bank of America or generate 10.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 45.45% |
| Values | Daily Returns |
Bank of America vs. Valartis Group AG
Performance |
| Timeline |
| Bank of America |
| Valartis Group AG |
Bank of America and Valartis Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Valartis Group
The main advantage of trading using opposite Bank of America and Valartis Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Valartis Group 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 Valartis Group will offset losses from the drop in Valartis Group'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 |
| Valartis Group vs. Starrag Group Holding | Valartis Group vs. Zueblin Immobilien Holding | Valartis Group vs. Schlatter Industries AG | Valartis Group vs. Mikron Holding AG |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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