Correlation Between Bank of America and Old Republic
Can any of the company-specific risk be diversified away by investing in both Bank of America and Old Republic 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 Old Republic 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 Old Republic International, you can compare the effects of market volatilities on Bank of America and Old Republic 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 Old Republic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Old Republic.
Diversification Opportunities for Bank of America and Old Republic
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Old is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Old Republic International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Republic Interna 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 Old Republic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Republic Interna has no effect on the direction of Bank of America i.e., Bank of America and Old Republic go up and down completely randomly.
Pair Corralation between Bank of America and Old Republic
Assuming the 90 days trading horizon Bank of America is expected to generate 4.25 times less return on investment than Old Republic. But when comparing it to its historical volatility, Bank of America is 2.28 times less risky than Old Republic. It trades about 0.11 of its potential returns per unit of risk. Old Republic International is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 3,579 in Old Republic International on August 24, 2024 and sell it today you would earn a total of 243.00 from holding Old Republic International or generate 6.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Old Republic International
Performance |
| Timeline |
| Bank of America |
| Old Republic Interna |
Bank of America and Old Republic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Old Republic
The main advantage of trading using opposite Bank of America and Old Republic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Old Republic 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 Old Republic will offset losses from the drop in Old Republic's long position.| Bank of America vs. Bank of America | Bank of America vs. Wells Fargo | Bank of America vs. Bank of America | Bank of America vs. China Construction Bank |
| Old Republic vs. Hartford Financial Services | Old Republic vs. Enstar Group Limited | Old Republic vs. American International Group | Old Republic vs. Axa Equitable Holdings |
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.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |