Correlation Between Promotora and Bank of America
Can any of the company-specific risk be diversified away by investing in both Promotora 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 Promotora 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 Promotora y Operadora and Bank of America, you can compare the effects of market volatilities on Promotora 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 Promotora with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Promotora and Bank of America.
Diversification Opportunities for Promotora and Bank of America
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Promotora and Bank is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Promotora y Operadora 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 Promotora 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 Promotora y Operadora 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 Promotora i.e., Promotora and Bank of America go up and down completely randomly.
Pair Corralation between Promotora and Bank of America
Assuming the 90 days trading horizon Promotora y Operadora is expected to generate 1.2 times more return on investment than Bank of America. However, Promotora is 1.2 times more volatile than Bank of America. It trades about 0.28 of its potential returns per unit of risk. Bank of America is currently generating about 0.0 per unit of risk. If you would invest 17,172 in Promotora y Operadora on September 12, 2024 and sell it today you would earn a total of 1,640 from holding Promotora y Operadora or generate 9.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Promotora y Operadora vs. Bank of America
Performance |
| Timeline |
| Promotora y Operadora |
| Bank of America |
Promotora and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Promotora and Bank of America
The main advantage of trading using opposite Promotora and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Promotora 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.| Promotora vs. Gruma SAB de | Promotora vs. Grupo Aeroportuario del | Promotora vs. Grupo Aeroportuario del | Promotora vs. Grupo Aeroportuario del |
| Bank of America vs. JPMorgan Chase Co | Bank of America vs. Citigroup | Bank of America vs. The Select Sector | Bank of America vs. Promotora y Operadora |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |