Correlation Between Bank of America and Klepierre

Can any of the company-specific risk be diversified away by investing in both Bank of America and Klepierre 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 Klepierre 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 Klepierre SA, you can compare the effects of market volatilities on Bank of America and Klepierre 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 Klepierre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Klepierre.

Diversification Opportunities for Bank of America and Klepierre

-0.59

Correlation Coefficient

Bank of America  Klepierre

Excellent diversification

The 3 months correlation between Bank and Klepierre is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Klepierre SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klepierre SA 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 Klepierre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klepierre SA has no effect on the direction of Bank of America i.e., Bank of America and Klepierre go up and down completely randomly.

Pair Corralation between Bank of America and Klepierre

Considering the 90-day investment horizon Bank of America is expected to under-perform the Klepierre. In addition to that, Bank of America is 1.7 times more volatile than Klepierre SA. It trades about -0.02 of its total potential returns per unit of risk. Klepierre SA is currently generating about 0.24 per unit of volatility. If you would invest  2,697  in Klepierre SA on December 29, 2024 and sell it today you would earn a total of  413.00  from holding Klepierre SA or generate 15.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

Bank of America  vs.  Klepierre SA

Bank of America

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank of America has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Bank of America is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Klepierre SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Klepierre SA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Klepierre sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank of America and Klepierre

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

The idea behind Bank of America and Klepierre SA 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.