Correlation Between Bank of America and Yakult Honsha
Can any of the company-specific risk be diversified away by investing in both Bank of America and Yakult Honsha 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 Yakult Honsha 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 Yakult Honsha Co, you can compare the effects of market volatilities on Bank of America and Yakult Honsha 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 Yakult Honsha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Yakult Honsha.
Diversification Opportunities for Bank of America and Yakult Honsha
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Yakult is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Yakult Honsha Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yakult Honsha 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 Yakult Honsha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yakult Honsha has no effect on the direction of Bank of America i.e., Bank of America and Yakult Honsha go up and down completely randomly.
Pair Corralation between Bank of America and Yakult Honsha
Considering the 90-day investment horizon Bank of America is expected to generate 5.66 times less return on investment than Yakult Honsha. But when comparing it to its historical volatility, Bank of America is 7.8 times less risky than Yakult Honsha. It trades about 0.03 of its potential returns per unit of risk. Yakult Honsha Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,059 in Yakult Honsha Co on September 12, 2024 and sell it today you would lose (19.00) from holding Yakult Honsha Co or give up 1.79% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Bank of America vs. Yakult Honsha Co
Performance |
Timeline |
Bank of America |
Yakult Honsha |
Bank of America and Yakult Honsha Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of America and Yakult Honsha
The main advantage of trading using opposite Bank of America and Yakult Honsha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Yakult Honsha 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 Yakult Honsha will offset losses from the drop in Yakult Honsha's long position.Bank of America vs. JPMorgan Chase Co | Bank of America vs. Victory Integrity Smallmid Cap | Bank of America vs. Hilton Worldwide Holdings | Bank of America vs. NVIDIA |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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