Correlation Between Bank of America and Western Union
Can any of the company-specific risk be diversified away by investing in both Bank of America and Western Union 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 Western Union 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 The Western Union, you can compare the effects of market volatilities on Bank of America and Western Union 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 Western Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Western Union.
Diversification Opportunities for Bank of America and Western Union
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Western is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and The Western Union in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Union 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 Western Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Union has no effect on the direction of Bank of America i.e., Bank of America and Western Union go up and down completely randomly.
Pair Corralation between Bank of America and Western Union
Considering the 90-day investment horizon Bank of America is expected to generate 1.1 times more return on investment than Western Union. However, Bank of America is 1.1 times more volatile than The Western Union. It trades about 0.16 of its potential returns per unit of risk. The Western Union is currently generating about -0.01 per unit of risk. If you would invest 4,044 in Bank of America on September 2, 2024 and sell it today you would earn a total of 707.00 from holding Bank of America or generate 17.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.88% |
| Values | Daily Returns |
Bank of America vs. The Western Union
Performance |
| Timeline |
| Bank of America |
| Western Union |
Bank of America and Western Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Western Union
The main advantage of trading using opposite Bank of America and Western Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Western Union 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 Western Union will offset losses from the drop in Western Union'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 |
| Western Union vs. Visa Inc | Western Union vs. American Express | Western Union vs. Capital One Financial | Western Union vs. Gentera SAB de |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Stocks Directory Find actively traded stocks across global markets |