Correlation Between Bank of America and ZAHIDJEE Textile
Can any of the company-specific risk be diversified away by investing in both Bank of America and ZAHIDJEE Textile 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 ZAHIDJEE Textile 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 ZAHIDJEE Textile Mills, you can compare the effects of market volatilities on Bank of America and ZAHIDJEE Textile 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 ZAHIDJEE Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and ZAHIDJEE Textile.
Diversification Opportunities for Bank of America and ZAHIDJEE Textile
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and ZAHIDJEE is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and ZAHIDJEE Textile Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZAHIDJEE Textile Mills 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 ZAHIDJEE Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZAHIDJEE Textile Mills has no effect on the direction of Bank of America i.e., Bank of America and ZAHIDJEE Textile go up and down completely randomly.
Pair Corralation between Bank of America and ZAHIDJEE Textile
Considering the 90-day investment horizon Bank of America is expected to generate 1.85 times less return on investment than ZAHIDJEE Textile. But when comparing it to its historical volatility, Bank of America is 3.18 times less risky than ZAHIDJEE Textile. It trades about 0.1 of its potential returns per unit of risk. ZAHIDJEE Textile Mills is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,628 in ZAHIDJEE Textile Mills on September 3, 2024 and sell it today you would earn a total of 387.00 from holding ZAHIDJEE Textile Mills or generate 14.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 62.4% |
| Values | Daily Returns |
Bank of America vs. ZAHIDJEE Textile Mills
Performance |
| Timeline |
| Bank of America |
| ZAHIDJEE Textile Mills |
Bank of America and ZAHIDJEE Textile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and ZAHIDJEE Textile
The main advantage of trading using opposite Bank of America and ZAHIDJEE Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, ZAHIDJEE Textile 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 ZAHIDJEE Textile will offset losses from the drop in ZAHIDJEE Textile's long position.| Bank of America vs. Partner Communications | Bank of America vs. Merck Company | Bank of America vs. Western Midstream Partners | Bank of America vs. Edgewise Therapeutics |
| ZAHIDJEE Textile vs. Masood Textile Mills | ZAHIDJEE Textile vs. Fauji Foods | ZAHIDJEE Textile vs. KSB Pumps | ZAHIDJEE Textile vs. Mari Petroleum |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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