Correlation Between Samsung Electronics and Bank of America
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics 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 Samsung Electronics 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 Samsung Electronics Co and Bank of America, you can compare the effects of market volatilities on Samsung Electronics 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 Samsung Electronics with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Bank of America.
Diversification Opportunities for Samsung Electronics and Bank of America
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Samsung and Bank is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co 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 Samsung Electronics 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 Samsung Electronics Co 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 Samsung Electronics i.e., Samsung Electronics and Bank of America go up and down completely randomly.
Pair Corralation between Samsung Electronics and Bank of America
Assuming the 90 days horizon Samsung Electronics is expected to generate 12.4 times less return on investment than Bank of America. In addition to that, Samsung Electronics is 1.41 times more volatile than Bank of America. It trades about 0.01 of its total potential returns per unit of risk. Bank of America is currently generating about 0.17 per unit of volatility. If you would invest 4,322 in Bank of America on November 1, 2024 and sell it today you would earn a total of 219.00 from holding Bank of America or generate 5.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Bank of America
Performance |
| Timeline |
| Samsung Electronics |
| Bank of America |
Samsung Electronics and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Bank of America
The main advantage of trading using opposite Samsung Electronics and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics 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.| Samsung Electronics vs. KOBE STEEL LTD | Samsung Electronics vs. Khiron Life Sciences | Samsung Electronics vs. ANGANG STEEL H | Samsung Electronics vs. CHAMPION IRON |
| Bank of America vs. Computershare Limited | Bank of America vs. Hemisphere Energy Corp | Bank of America vs. COMPUTERSHARE | Bank of America vs. DELTA AIR LINES |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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