Correlation Between Bank of America and JABHOL

Can any of the company-specific risk be diversified away by investing in both Bank of America and JABHOL 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 and JABHOL 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 JABHOL 22 23 NOV 30, you can compare the effects of market volatilities on Bank of America and JABHOL 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 with a short position of JABHOL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and JABHOL.

Diversification Opportunities for Bank of America and JABHOL

0.77

Correlation Coefficient

Bank of America  JABHOL

Poor diversification

The 3 months correlation between Bank and JABHOL is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and JABHOL 22 23 NOV 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JABHOL 22 23 and Bank of America 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 JABHOL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JABHOL 22 23 has no effect on the direction of Bank of America i.e., Bank of America and JABHOL go up and down completely randomly.

Pair Corralation between Bank of America and JABHOL

Considering the 90-day investment horizon Bank of America is expected to generate 0.59 times more return on investment than JABHOL. However, Bank of America is 1.68 times less risky than JABHOL. It trades about 0.11 of its potential returns per unit of risk. JABHOL 22 23 NOV 30 is currently generating about -0.36 per unit of risk. If you would invest  3,965  in Bank of America on September 21, 2024 and sell it today you would earn a total of  452.00  from holding Bank of America or generate 11.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	17.19%
Values	Daily Returns

Bank of America  vs.  JABHOL 22 23 NOV 30

Bank of America

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of America are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Bank of America may actually be approaching a critical reversion point that can send shares even higher in January 2025.

JABHOL 22 23

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JABHOL 22 23 NOV 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for JABHOL 22 23 NOV 30 investors.

Pair Trading with Bank of America and JABHOL

The main advantage of trading using opposite Bank of America and JABHOL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, JABHOL 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 JABHOL will offset losses from the drop in JABHOL's long position.

The idea behind Bank of America and JABHOL 22 23 NOV 30 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.