Correlation Between Bank of America and Grupo Aval
Can any of the company-specific risk be diversified away by investing in both Bank of America and Grupo Aval 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 Grupo Aval 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 Grupo Aval, you can compare the effects of market volatilities on Bank of America and Grupo Aval 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 Grupo Aval. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Grupo Aval.
Diversification Opportunities for Bank of America and Grupo Aval
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Grupo is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Grupo Aval in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Aval 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 Grupo Aval. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Aval has no effect on the direction of Bank of America i.e., Bank of America and Grupo Aval go up and down completely randomly.
Pair Corralation between Bank of America and Grupo Aval
Assuming the 90 days trading horizon Bank of America is expected to generate 45.83 times less return on investment than Grupo Aval. But when comparing it to its historical volatility, Bank of America is 3.94 times less risky than Grupo Aval. It trades about 0.02 of its potential returns per unit of risk. Grupo Aval is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 213.00 in Grupo Aval on December 2, 2024 and sell it today you would earn a total of 73.00 from holding Grupo Aval or generate 34.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Bank of America vs. Grupo Aval
Performance |
Timeline |
Bank of America |
Grupo Aval |
Bank of America and Grupo Aval Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of America and Grupo Aval
The main advantage of trading using opposite Bank of America and Grupo Aval positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Grupo Aval 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 Grupo Aval will offset losses from the drop in Grupo Aval's long position.Bank of America vs. GMO Internet | Bank of America vs. KVH Industries | Bank of America vs. National CineMedia | Bank of America vs. Singapore Airlines |
Grupo Aval vs. Banco De Chile | Grupo Aval vs. Banco Santander Chile | Grupo Aval vs. Credicorp | Grupo Aval vs. Foreign Trade Bank |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
Share Portfolio Track or share privately all of your investments from the convenience of any device | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |