Correlation Between Japan Medical and Bank of America
Can any of the company-specific risk be diversified away by investing in both Japan Medical 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 Japan Medical 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 Japan Medical Dynamic and Verizon Communications, you can compare the effects of market volatilities on Japan Medical 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 Japan Medical with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Medical and Bank of America.
Diversification Opportunities for Japan Medical and Bank of America
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Japan and Bank is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Japan Medical Dynamic and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and Japan Medical 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 Japan Medical Dynamic 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 Japan Medical i.e., Japan Medical and Bank of America go up and down completely randomly.
Pair Corralation between Japan Medical and Bank of America
Assuming the 90 days horizon Japan Medical is expected to generate 14.55 times less return on investment than Bank of America. In addition to that, Japan Medical is 1.02 times more volatile than Verizon Communications. It trades about 0.02 of its total potential returns per unit of risk. Verizon Communications is currently generating about 0.37 per unit of volatility. If you would invest 3,803 in Verizon Communications on August 31, 2024 and sell it today you would earn a total of 406.00 from holding Verizon Communications or generate 10.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Medical Dynamic vs. Verizon Communications
Performance |
| Timeline |
| Japan Medical Dynamic |
| Verizon Communications |
Japan Medical and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Medical and Bank of America
The main advantage of trading using opposite Japan Medical and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Medical 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.| Japan Medical vs. Stryker | Japan Medical vs. Insulet | Japan Medical vs. Superior Plus Corp | Japan Medical vs. NMI Holdings |
| Bank of America vs. SIVERS SEMICONDUCTORS AB | Bank of America vs. Darden Restaurants | Bank of America vs. Reliance Steel Aluminum | Bank of America vs. Q2M Managementberatung AG |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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