Correlation Between Bank of America and John Wiley
Can any of the company-specific risk be diversified away by investing in both Bank of America and John Wiley 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 John Wiley 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 John Wiley Sons, you can compare the effects of market volatilities on Bank of America and John Wiley 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 John Wiley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and John Wiley.
Diversification Opportunities for Bank of America and John Wiley
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and John is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and John Wiley Sons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Wiley Sons 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 John Wiley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Wiley Sons has no effect on the direction of Bank of America i.e., Bank of America and John Wiley go up and down completely randomly.
Pair Corralation between Bank of America and John Wiley
Considering the 90-day investment horizon Bank of America is expected to generate 0.72 times more return on investment than John Wiley. However, Bank of America is 1.39 times less risky than John Wiley. It trades about 0.14 of its potential returns per unit of risk. John Wiley Sons is currently generating about -0.09 per unit of risk. If you would invest 4,621 in Bank of America on November 9, 2024 and sell it today you would earn a total of 153.00 from holding Bank of America or generate 3.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. John Wiley Sons
Performance |
| Timeline |
| Bank of America |
| John Wiley Sons |
Bank of America and John Wiley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and John Wiley
The main advantage of trading using opposite Bank of America and John Wiley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, John Wiley 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 John Wiley will offset losses from the drop in John Wiley'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 |
| John Wiley vs. Scholastic | John Wiley vs. Pearson PLC ADR | John Wiley vs. New York Times | John Wiley vs. Lee Enterprises Incorporated |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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