Correlation Between Bank of America and General Shopping
Can any of the company-specific risk be diversified away by investing in both Bank of America and General Shopping 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 General Shopping 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 General Shopping e, you can compare the effects of market volatilities on Bank of America and General Shopping 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 General Shopping. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and General Shopping.
Diversification Opportunities for Bank of America and General Shopping
-0.95 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and General is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and General Shopping e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Shopping e 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 General Shopping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Shopping e has no effect on the direction of Bank of America i.e., Bank of America and General Shopping go up and down completely randomly.
Pair Corralation between Bank of America and General Shopping
Assuming the 90 days trading horizon Bank of America is expected to generate 0.38 times more return on investment than General Shopping. However, Bank of America is 2.66 times less risky than General Shopping. It trades about 0.35 of its potential returns per unit of risk. General Shopping e is currently generating about -0.27 per unit of risk. If you would invest 6,619 in Bank of America on September 12, 2024 and sell it today you would earn a total of 449.00 from holding Bank of America or generate 6.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. General Shopping e
Performance |
| Timeline |
| Bank of America |
| General Shopping e |
Bank of America and General Shopping Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and General Shopping
The main advantage of trading using opposite Bank of America and General Shopping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, General Shopping 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 General Shopping will offset losses from the drop in General Shopping's long position.| Bank of America vs. Deutsche Bank Aktiengesellschaft | Bank of America vs. HDFC Bank Limited | Bank of America vs. Sumitomo Mitsui Financial | Bank of America vs. Verizon Communications |
| General Shopping vs. Unity Software | General Shopping vs. Align Technology | General Shopping vs. Agilent Technologies | General Shopping vs. NXP Semiconductors NV |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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