Correlation Between Bank of America and VOXX International

Can any of the company-specific risk be diversified away by investing in both Bank of America and VOXX International 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 VOXX International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Verizon Communications and VOXX International, you can compare the effects of market volatilities on Bank of America and VOXX International 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 VOXX International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and VOXX International.

Diversification Opportunities for Bank of America and VOXX International

-0.03

Correlation Coefficient

Bank of America  VOXX International

Good diversification

The 3 months correlation between Bank and VOXX is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and VOXX International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VOXX International 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 VOXX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VOXX International has no effect on the direction of Bank of America i.e., Bank of America and VOXX International go up and down completely randomly.

Pair Corralation between Bank of America and VOXX International

Assuming the 90 days trading horizon Bank of America is expected to generate 1.62 times less return on investment than VOXX International. But when comparing it to its historical volatility, Verizon Communications is 3.59 times less risky than VOXX International. It trades about 0.03 of its potential returns per unit of risk. VOXX International is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  930.00  in VOXX International on October 21, 2024 and sell it today you would lose (220.00) from holding VOXX International or give up 23.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Verizon Communications  vs.  VOXX International

Verizon Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verizon Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Bank of America is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

VOXX International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VOXX International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, VOXX International may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bank of America and VOXX International

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

The idea behind Verizon Communications and VOXX International 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..