Correlation Between Bank of America and EVS Broadcast
Can any of the company-specific risk be diversified away by investing in both Bank of America and EVS Broadcast 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 EVS Broadcast into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and EVS Broadcast Equipment, you can compare the effects of market volatilities on Bank of America and EVS Broadcast 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 EVS Broadcast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and EVS Broadcast.
Diversification Opportunities for Bank of America and EVS Broadcast
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bank and EVS is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and EVS Broadcast Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVS Broadcast Equipment 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 Verizon Communications are associated (or correlated) with EVS Broadcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVS Broadcast Equipment has no effect on the direction of Bank of America i.e., Bank of America and EVS Broadcast go up and down completely randomly.
Pair Corralation between Bank of America and EVS Broadcast
Assuming the 90 days trading horizon Verizon Communications is expected to under-perform the EVS Broadcast. In addition to that, Bank of America is 1.26 times more volatile than EVS Broadcast Equipment. It trades about -0.24 of its total potential returns per unit of risk. EVS Broadcast Equipment is currently generating about 0.26 per unit of volatility. If you would invest 2,925 in EVS Broadcast Equipment on October 8, 2024 and sell it today you would earn a total of 130.00 from holding EVS Broadcast Equipment or generate 4.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Verizon Communications vs. EVS Broadcast Equipment
Performance |
Timeline |
Verizon Communications |
EVS Broadcast Equipment |
Bank of America and EVS Broadcast Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of America and EVS Broadcast
The main advantage of trading using opposite Bank of America and EVS Broadcast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, EVS Broadcast 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 EVS Broadcast will offset losses from the drop in EVS Broadcast's long position.Bank of America vs. Apple Inc | Bank of America vs. Apple Inc | Bank of America vs. Apple Inc | Bank of America vs. Apple Inc |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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