Correlation Between Bank of America and Aozora Bank
Can any of the company-specific risk be diversified away by investing in both Bank of America and Aozora Bank 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 Aozora Bank 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 Aozora Bank, you can compare the effects of market volatilities on Bank of America and Aozora Bank 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 Aozora Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Aozora Bank.
Diversification Opportunities for Bank of America and Aozora Bank
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Aozora is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Aozora Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aozora Bank 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 Aozora Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aozora Bank has no effect on the direction of Bank of America i.e., Bank of America and Aozora Bank go up and down completely randomly.
Pair Corralation between Bank of America and Aozora Bank
Assuming the 90 days horizon Bank of America is expected to generate 1.15 times more return on investment than Aozora Bank. However, Bank of America is 1.15 times more volatile than Aozora Bank. It trades about 0.12 of its potential returns per unit of risk. Aozora Bank is currently generating about -0.12 per unit of risk. If you would invest 4,322 in Bank of America on November 3, 2024 and sell it today you would earn a total of 161.00 from holding Bank of America or generate 3.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Aozora Bank
Performance |
| Timeline |
| Bank of America |
| Aozora Bank |
Bank of America and Aozora Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Aozora Bank
The main advantage of trading using opposite Bank of America and Aozora Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Aozora Bank 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 Aozora Bank will offset losses from the drop in Aozora Bank's long position.| Bank of America vs. MidCap Financial Investment | Bank of America vs. Rocket Internet SE | Bank of America vs. Singapore Telecommunications Limited | Bank of America vs. GMO Internet |
| Aozora Bank vs. Fuji Media Holdings | Aozora Bank vs. MUTUIONLINE | Aozora Bank vs. ATRESMEDIA | Aozora Bank vs. Lamar Advertising |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |