Correlation Between Bank of America and BANCO
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By analyzing existing cross correlation between Bank of America and BANCO SANTANDER SA, you can compare the effects of market volatilities on Bank of America and BANCO 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 BANCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and BANCO.
Diversification Opportunities for Bank of America and BANCO
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bank and BANCO is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and BANCO SANTANDER SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANCO SANTANDER 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 BANCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANCO SANTANDER SA has no effect on the direction of Bank of America i.e., Bank of America and BANCO go up and down completely randomly.
Pair Corralation between Bank of America and BANCO
Considering the 90-day investment horizon Bank of America is expected to generate 1.8 times more return on investment than BANCO. However, Bank of America is 1.8 times more volatile than BANCO SANTANDER SA. It trades about -0.02 of its potential returns per unit of risk. BANCO SANTANDER SA is currently generating about -0.06 per unit of risk. If you would invest 4,361 in Bank of America on December 22, 2024 and sell it today you would lose (114.00) from holding Bank of America or give up 2.61% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 88.52% |
Values | Daily Returns |
Bank of America vs. BANCO SANTANDER SA
Performance |
Timeline |
Bank of America |
BANCO SANTANDER SA |
Bank of America and BANCO Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of America and BANCO
The main advantage of trading using opposite Bank of America and BANCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, BANCO 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 BANCO will offset losses from the drop in BANCO'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 |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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