Correlation Between Bank of America and Volvo AB
Can any of the company-specific risk be diversified away by investing in both Bank of America and Volvo AB 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 Volvo AB 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 Volvo AB ser, you can compare the effects of market volatilities on Bank of America and Volvo AB 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 Volvo AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Volvo AB.
Diversification Opportunities for Bank of America and Volvo AB
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Volvo is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Volvo AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volvo AB ser 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 Volvo AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volvo AB ser has no effect on the direction of Bank of America i.e., Bank of America and Volvo AB go up and down completely randomly.
Pair Corralation between Bank of America and Volvo AB
Considering the 90-day investment horizon Bank of America is expected to generate 0.62 times more return on investment than Volvo AB. However, Bank of America is 1.61 times less risky than Volvo AB. It trades about 0.1 of its potential returns per unit of risk. Volvo AB ser is currently generating about 0.05 per unit of risk. If you would invest 2,810 in Bank of America on September 2, 2024 and sell it today you would earn a total of 1,941 from holding Bank of America or generate 69.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.28% |
| Values | Daily Returns |
Bank of America vs. Volvo AB ser
Performance |
| Timeline |
| Bank of America |
| Volvo AB ser |
Bank of America and Volvo AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Volvo AB
The main advantage of trading using opposite Bank of America and Volvo AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Volvo AB 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 Volvo AB will offset losses from the drop in Volvo AB's long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Volvo AB vs. Daimler Truck Holding | Volvo AB vs. Oshkosh | Volvo AB vs. Hydrofarm Holdings Group | Volvo AB vs. Hino Motors Ltd |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |