Correlation Between Bank of America and Workpoint Entertainment
Can any of the company-specific risk be diversified away by investing in both Bank of America and Workpoint Entertainment 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 Workpoint Entertainment 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 Workpoint Entertainment Public, you can compare the effects of market volatilities on Bank of America and Workpoint Entertainment 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 Workpoint Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Workpoint Entertainment.
Diversification Opportunities for Bank of America and Workpoint Entertainment
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Workpoint is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Workpoint Entertainment Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workpoint Entertainment 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 Workpoint Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workpoint Entertainment has no effect on the direction of Bank of America i.e., Bank of America and Workpoint Entertainment go up and down completely randomly.
Pair Corralation between Bank of America and Workpoint Entertainment
Considering the 90-day investment horizon Bank of America is expected to generate 23.38 times less return on investment than Workpoint Entertainment. But when comparing it to its historical volatility, Bank of America is 29.97 times less risky than Workpoint Entertainment. It trades about 0.05 of its potential returns per unit of risk. Workpoint Entertainment Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,811 in Workpoint Entertainment Public on August 27, 2024 and sell it today you would lose (1,006) from holding Workpoint Entertainment Public or give up 55.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.7% |
| Values | Daily Returns |
Bank of America vs. Workpoint Entertainment Public
Performance |
| Timeline |
| Bank of America |
| Workpoint Entertainment |
Bank of America and Workpoint Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Workpoint Entertainment
The main advantage of trading using opposite Bank of America and Workpoint Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Workpoint Entertainment 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 Workpoint Entertainment will offset losses from the drop in Workpoint Entertainment'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 |
| Workpoint Entertainment vs. BEC World Public | Workpoint Entertainment vs. Beauty Community Public | Workpoint Entertainment vs. Major Cineplex Group | Workpoint Entertainment vs. True Public |
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 Stocks Directory module to find actively traded stocks across global markets.
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