Correlation Between Beijing Media and Bank of America
Can any of the company-specific risk be diversified away by investing in both Beijing Media and Bank of America 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 Beijing Media and Bank of America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beijing Media and Bank of America, you can compare the effects of market volatilities on Beijing Media and Bank of America 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 Beijing Media with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Media and Bank of America.
Diversification Opportunities for Beijing Media and Bank of America
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Beijing and Bank is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Media and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of America and Beijing Media 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 Beijing Media are associated (or correlated) with Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of America has no effect on the direction of Beijing Media i.e., Beijing Media and Bank of America go up and down completely randomly.
Pair Corralation between Beijing Media and Bank of America
Assuming the 90 days horizon Beijing Media is expected to generate 12.35 times more return on investment than Bank of America. However, Beijing Media is 12.35 times more volatile than Bank of America. It trades about 0.06 of its potential returns per unit of risk. Bank of America is currently generating about 0.11 per unit of risk. If you would invest 3.45 in Beijing Media on September 12, 2024 and sell it today you would earn a total of 0.15 from holding Beijing Media or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beijing Media vs. Bank of America
Performance |
| Timeline |
| Beijing Media |
| Bank of America |
Beijing Media and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beijing Media and Bank of America
The main advantage of trading using opposite Beijing Media and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing Media position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.| Beijing Media vs. Superior Plus Corp | Beijing Media vs. SIVERS SEMICONDUCTORS AB | Beijing Media vs. NorAm Drilling AS | Beijing Media vs. Norsk Hydro ASA |
| Bank of America vs. Agricultural Bank of | Bank of America vs. Commonwealth Bank of | Bank of America vs. Superior Plus Corp | Bank of America vs. SIVERS SEMICONDUCTORS AB |
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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