Correlation Between Bank of America and Yokogawa Electric
Can any of the company-specific risk be diversified away by investing in both Bank of America and Yokogawa Electric 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 Yokogawa Electric 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 Yokogawa Electric, you can compare the effects of market volatilities on Bank of America and Yokogawa Electric 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 Yokogawa Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Yokogawa Electric.
Diversification Opportunities for Bank of America and Yokogawa Electric
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Yokogawa is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Yokogawa Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yokogawa Electric 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 Yokogawa Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yokogawa Electric has no effect on the direction of Bank of America i.e., Bank of America and Yokogawa Electric go up and down completely randomly.
Pair Corralation between Bank of America and Yokogawa Electric
Considering the 90-day investment horizon Bank of America is expected to generate 0.02 times more return on investment than Yokogawa Electric. However, Bank of America is 51.55 times less risky than Yokogawa Electric. It trades about 0.06 of its potential returns per unit of risk. Yokogawa Electric is currently generating about -0.09 per unit of risk. If you would invest 3,079 in Bank of America on August 30, 2024 and sell it today you would earn a total of 1,698 from holding Bank of America or generate 55.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 31.31% |
| Values | Daily Returns |
Bank of America vs. Yokogawa Electric
Performance |
| Timeline |
| Bank of America |
| Yokogawa Electric |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank of America and Yokogawa Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Yokogawa Electric
The main advantage of trading using opposite Bank of America and Yokogawa Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Yokogawa Electric 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 Yokogawa Electric will offset losses from the drop in Yokogawa Electric'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. JPMorgan Chase Co |
| Yokogawa Electric vs. Daifuku Co | Yokogawa Electric vs. Eaton PLC | Yokogawa Electric vs. Yokogawa Electric Corp | Yokogawa Electric vs. Nidec |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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