Correlation Between Bank of America and Dell Technologies
Can any of the company-specific risk be diversified away by investing in both Bank of America and Dell Technologies 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 Dell Technologies 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 Dell Technologies, you can compare the effects of market volatilities on Bank of America and Dell Technologies 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 Dell Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Dell Technologies.
Diversification Opportunities for Bank of America and Dell Technologies
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Dell is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Dell Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dell Technologies 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 Dell Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dell Technologies has no effect on the direction of Bank of America i.e., Bank of America and Dell Technologies go up and down completely randomly.
Pair Corralation between Bank of America and Dell Technologies
Assuming the 90 days trading horizon Bank of America is expected to generate 0.59 times more return on investment than Dell Technologies. However, Bank of America is 1.71 times less risky than Dell Technologies. It trades about 0.37 of its potential returns per unit of risk. Dell Technologies is currently generating about 0.09 per unit of risk. If you would invest 6,136 in Bank of America on August 30, 2024 and sell it today you would earn a total of 996.00 from holding Bank of America or generate 16.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Bank of America vs. Dell Technologies
Performance |
| Timeline |
| Bank of America |
| Dell Technologies |
Bank of America and Dell Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Dell Technologies
The main advantage of trading using opposite Bank of America and Dell Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Dell Technologies 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 Dell Technologies will offset losses from the drop in Dell Technologies' long position.| Bank of America vs. Marvell Technology | Bank of America vs. Cognizant Technology Solutions | Bank of America vs. Paycom Software | Bank of America vs. Spotify Technology SA |
| Dell Technologies vs. Bemobi Mobile Tech | Dell Technologies vs. Paycom Software | Dell Technologies vs. Bank of America | Dell Technologies vs. Zoom Video Communications |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |