Correlation Between Orix Corp and Bank of America
Can any of the company-specific risk be diversified away by investing in both Orix Corp 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 Orix Corp 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 Orix Corp Ads and Bank of America, you can compare the effects of market volatilities on Orix Corp 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 Orix Corp with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orix Corp and Bank of America.
Diversification Opportunities for Orix Corp and Bank of America
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Orix and Bank is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Orix Corp Ads 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 Orix 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 Orix Corp Ads 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 Orix Corp i.e., Orix Corp and Bank of America go up and down completely randomly.
Pair Corralation between Orix Corp and Bank of America
Assuming the 90 days trading horizon Orix Corp is expected to generate 2.17 times less return on investment than Bank of America. But when comparing it to its historical volatility, Orix Corp Ads is 1.43 times less risky than Bank of America. It trades about 0.19 of its potential returns per unit of risk. Bank of America is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 3,874 in Bank of America on September 1, 2024 and sell it today you would earn a total of 666.00 from holding Bank of America or generate 17.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Orix Corp Ads vs. Bank of America
Performance |
| Timeline |
| Orix Corp Ads |
| Bank of America |
Orix Corp and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orix Corp and Bank of America
The main advantage of trading using opposite Orix Corp and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orix Corp 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.| Orix Corp vs. UMC Electronics Co | Orix Corp vs. X FAB Silicon Foundries | Orix Corp vs. METHODE ELECTRONICS | Orix Corp vs. UET United Electronic |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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