Correlation Between Bank of America and JYP Entertainment
Can any of the company-specific risk be diversified away by investing in both Bank of America and JYP Entertainment 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 JYP Entertainment 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 JYP Entertainment, you can compare the effects of market volatilities on Bank of America and JYP Entertainment 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 JYP Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and JYP Entertainment.
Diversification Opportunities for Bank of America and JYP Entertainment
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and JYP is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and JYP Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JYP Entertainment 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 JYP Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JYP Entertainment has no effect on the direction of Bank of America i.e., Bank of America and JYP Entertainment go up and down completely randomly.
Pair Corralation between Bank of America and JYP Entertainment
Considering the 90-day investment horizon Bank of America is expected to generate 0.54 times more return on investment than JYP Entertainment. However, Bank of America is 1.84 times less risky than JYP Entertainment. It trades about -0.02 of its potential returns per unit of risk. JYP Entertainment is currently generating about -0.05 per unit of risk. If you would invest 4,363 in Bank of America on December 28, 2024 and sell it today you would lose (107.00) from holding Bank of America or give up 2.45% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.0% |
Values | Daily Returns |
Bank of America vs. JYP Entertainment
Performance |
Timeline |
Bank of America |
JYP Entertainment |
Bank of America and JYP Entertainment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of America and JYP Entertainment
The main advantage of trading using opposite Bank of America and JYP Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, JYP Entertainment 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 JYP Entertainment will offset losses from the drop in JYP Entertainment's long position.Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
JYP Entertainment vs. YG Entertainment | JYP Entertainment vs. SM Entertainment Co | JYP Entertainment vs. Cube Entertainment |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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