Correlation Between Expeditors International and Bank of America
Can any of the company-specific risk be diversified away by investing in both Expeditors 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 Expeditors 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 Expeditors International of and Verizon Communications, you can compare the effects of market volatilities on Expeditors 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 Expeditors International with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Expeditors International and Bank of America.
Diversification Opportunities for Expeditors International and Bank of America
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Expeditors and Bank is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Expeditors International of and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and Expeditors 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 Expeditors International of 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 Verizon Communications has no effect on the direction of Expeditors International i.e., Expeditors International and Bank of America go up and down completely randomly.
Pair Corralation between Expeditors International and Bank of America
Assuming the 90 days horizon Expeditors International of is expected to generate 0.83 times more return on investment than Bank of America. However, Expeditors International of is 1.2 times less risky than Bank of America. It trades about 0.19 of its potential returns per unit of risk. Verizon Communications is currently generating about 0.16 per unit of risk. If you would invest 10,934 in Expeditors International of on September 14, 2024 and sell it today you would earn a total of 426.00 from holding Expeditors International of or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Expeditors International of vs. Verizon Communications
Performance |
| Timeline |
| Expeditors International |
| Verizon Communications |
Expeditors International and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Expeditors International and Bank of America
The main advantage of trading using opposite Expeditors International and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Expeditors 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.| Expeditors International vs. AUSTEVOLL SEAFOOD | Expeditors International vs. THORNEY TECHS LTD | Expeditors International vs. Associated British Foods | Expeditors International vs. ASSOC BR FOODS |
| Bank of America vs. Apple Inc | Bank of America vs. Apple Inc | Bank of America vs. Apple Inc | Bank of America vs. Apple Inc |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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