Correlation Between Dupont De and Bank of America
Can any of the company-specific risk be diversified away by investing in both Dupont De 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 Dupont De 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 Dupont De Nemours and Bank of America, you can compare the effects of market volatilities on Dupont De 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 Dupont De with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Bank of America.
Diversification Opportunities for Dupont De and Bank of America
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dupont and Bank is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours 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 Dupont De 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 Dupont De Nemours 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 Dupont De i.e., Dupont De and Bank of America go up and down completely randomly.
Pair Corralation between Dupont De and Bank of America
Allowing for the 90-day total investment horizon Dupont De is expected to generate 1.26 times less return on investment than Bank of America. But when comparing it to its historical volatility, Dupont De Nemours is 1.27 times less risky than Bank of America. It trades about 0.06 of its potential returns per unit of risk. Bank of America is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,776 in Bank of America on October 25, 2024 and sell it today you would earn a total of 27.00 from holding Bank of America or generate 1.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dupont De Nemours vs. Bank of America
Performance |
| Timeline |
| Dupont De Nemours |
| Bank of America |
Dupont De and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and Bank of America
The main advantage of trading using opposite Dupont De and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De 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.| Dupont De vs. Eastman Chemical | Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide |
| Bank of America vs. Bank of America | Bank of America vs. Bank of America | Bank of America vs. JPMorgan Chase Co | Bank of America vs. Wells Fargo |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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