Correlation Between Bank of America and INFORMATION SVC
Can any of the company-specific risk be diversified away by investing in both Bank of America and INFORMATION SVC 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 INFORMATION SVC 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 INFORMATION SVC GRP, you can compare the effects of market volatilities on Bank of America and INFORMATION SVC 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 INFORMATION SVC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and INFORMATION SVC.
Diversification Opportunities for Bank of America and INFORMATION SVC
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and INFORMATION is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and INFORMATION SVC GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INFORMATION SVC GRP 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 INFORMATION SVC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INFORMATION SVC GRP has no effect on the direction of Bank of America i.e., Bank of America and INFORMATION SVC go up and down completely randomly.
Pair Corralation between Bank of America and INFORMATION SVC
Considering the 90-day investment horizon Bank of America is expected to generate 0.7 times more return on investment than INFORMATION SVC. However, Bank of America is 1.43 times less risky than INFORMATION SVC. It trades about 0.14 of its potential returns per unit of risk. INFORMATION SVC GRP is currently generating about -0.07 per unit of risk. If you would invest 4,438 in Bank of America on October 25, 2024 and sell it today you would earn a total of 141.00 from holding Bank of America or generate 3.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 89.47% |
| Values | Daily Returns |
Bank of America vs. INFORMATION SVC GRP
Performance |
| Timeline |
| Bank of America |
| INFORMATION SVC GRP |
Bank of America and INFORMATION SVC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and INFORMATION SVC
The main advantage of trading using opposite Bank of America and INFORMATION SVC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, INFORMATION SVC 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 INFORMATION SVC will offset losses from the drop in INFORMATION SVC's long position.| Bank of America vs. JPMorgan Chase Co | Bank of America vs. Bank of America | Bank of America vs. RLJ Lodging Trust | Bank of America vs. PennyMac Finl Svcs |
| INFORMATION SVC vs. ELMOS SEMICONDUCTOR | INFORMATION SVC vs. Elmos Semiconductor SE | INFORMATION SVC vs. TAL Education Group | INFORMATION SVC vs. CAREER EDUCATION |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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