Correlation Between EFG International and Bank of America
Can any of the company-specific risk be diversified away by investing in both EFG International 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 EFG International 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 EFG International AG and Bank of America, you can compare the effects of market volatilities on EFG International 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 EFG International with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of EFG International and Bank of America.
Diversification Opportunities for EFG International and Bank of America
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between EFG and Bank is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding EFG International AG 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 EFG International 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 EFG International AG 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 EFG International i.e., EFG International and Bank of America go up and down completely randomly.
Pair Corralation between EFG International and Bank of America
Assuming the 90 days horizon EFG International is expected to generate 1.91 times less return on investment than Bank of America. In addition to that, EFG International is 1.52 times more volatile than Bank of America. It trades about 0.09 of its total potential returns per unit of risk. Bank of America is currently generating about 0.26 per unit of volatility. If you would invest 4,391 in Bank of America on October 29, 2024 and sell it today you would earn a total of 261.00 from holding Bank of America or generate 5.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EFG International AG vs. Bank of America
Performance |
| Timeline |
| EFG International |
| Bank of America |
EFG International and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EFG International and Bank of America
The main advantage of trading using opposite EFG International and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EFG International 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.| EFG International vs. Bank of America | EFG International vs. Citigroup | EFG International vs. JPMorgan Chase Co | EFG International vs. Wells Fargo |
| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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