Correlation Between Bank of America Corp and SOFTBANK CORP
Can any of the company-specific risk be diversified away by investing in both Bank of America Corp and SOFTBANK CORP 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 Corp and SOFTBANK CORP 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 SOFTBANK P ADR, you can compare the effects of market volatilities on Bank of America Corp and SOFTBANK CORP 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 Corp with a short position of SOFTBANK CORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America Corp and SOFTBANK CORP.
Diversification Opportunities for Bank of America Corp and SOFTBANK CORP
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and SOFTBANK is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and SOFTBANK P ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFTBANK P ADR and Bank of America Corp 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 SOFTBANK CORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOFTBANK P ADR has no effect on the direction of Bank of America Corp i.e., Bank of America Corp and SOFTBANK CORP go up and down completely randomly.
Pair Corralation between Bank of America Corp and SOFTBANK CORP
Assuming the 90 days trading horizon Bank of America is expected to generate 0.46 times more return on investment than SOFTBANK CORP. However, Bank of America is 2.17 times less risky than SOFTBANK CORP. It trades about 0.28 of its potential returns per unit of risk. SOFTBANK P ADR is currently generating about 0.01 per unit of risk. If you would invest 3,932 in Bank of America on August 29, 2024 and sell it today you would earn a total of 602.00 from holding Bank of America or generate 15.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bank of America vs. SOFTBANK P ADR
Performance |
| Timeline |
| Bank of America Corp |
| SOFTBANK P ADR |
Bank of America Corp and SOFTBANK CORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America Corp and SOFTBANK CORP
The main advantage of trading using opposite Bank of America Corp and SOFTBANK CORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America Corp position performs unexpectedly, SOFTBANK CORP 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 SOFTBANK CORP will offset losses from the drop in SOFTBANK CORP's long position.| Bank of America Corp vs. SOFTBANK P ADR | Bank of America Corp vs. Thai Beverage Public | Bank of America Corp vs. Fevertree Drinks PLC | Bank of America Corp vs. SCANSOURCE |
| SOFTBANK CORP vs. Apple Inc | SOFTBANK CORP vs. Apple Inc | SOFTBANK CORP vs. Apple Inc | SOFTBANK CORP 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 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.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Transaction History View history of all your transactions and understand their impact on performance |