Correlation Between TAL Education and Bank of America
Can any of the company-specific risk be diversified away by investing in both TAL Education 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 TAL Education 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 TAL Education Group and Bank of America, you can compare the effects of market volatilities on TAL Education 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 TAL Education with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of TAL Education and Bank of America.
Diversification Opportunities for TAL Education and Bank of America
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TAL and Bank is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group 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 TAL Education 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 TAL Education Group 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 TAL Education i.e., TAL Education and Bank of America go up and down completely randomly.
Pair Corralation between TAL Education and Bank of America
Assuming the 90 days trading horizon TAL Education Group is expected to generate 2.5 times more return on investment than Bank of America. However, TAL Education is 2.5 times more volatile than Bank of America. It trades about 0.18 of its potential returns per unit of risk. Bank of America is currently generating about -0.36 per unit of risk. If you would invest 703.00 in TAL Education Group on November 28, 2024 and sell it today you would earn a total of 84.00 from holding TAL Education Group or generate 11.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TAL Education Group vs. Bank of America
Performance |
| Timeline |
| TAL Education Group |
| Bank of America |
TAL Education and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TAL Education and Bank of America
The main advantage of trading using opposite TAL Education and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAL Education 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.| TAL Education vs. Spotify Technology SA | TAL Education vs. GX AI TECH | TAL Education vs. Hormel Foods | TAL Education vs. Uber Technologies |
| Bank of America vs. Applied Materials, | Bank of America vs. Cognizant Technology Solutions | Bank of America vs. Chunghwa Telecom Co, | Bank of America vs. DENTSPLY SIRONA |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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