Correlation Between Bank of America and Zoomd Technologies

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

Diversification Opportunities for Bank of America and Zoomd Technologies

0.0

Correlation Coefficient

Bank of America  Zoomd Technologies

Pay attention - limited upside

The 3 months correlation between Bank and Zoomd is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Zoomd Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoomd Technologies 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 Zoomd Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoomd Technologies has no effect on the direction of Bank of America i.e., Bank of America and Zoomd Technologies go up and down completely randomly.

Pair Corralation between Bank of America and Zoomd Technologies

Considering the 90-day investment horizon Bank of America is expected to generate 0.28 times more return on investment than Zoomd Technologies. However, Bank of America is 3.55 times less risky than Zoomd Technologies. It trades about 0.1 of its potential returns per unit of risk. Zoomd Technologies is currently generating about -0.1 per unit of risk. If you would invest  4,391  in Bank of America on November 30, 2024 and sell it today you would earn a total of  219.00  from holding Bank of America or generate 4.99% return on investment over 90 days.

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

Bank of America  vs.  Zoomd Technologies

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Zoomd Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zoomd Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Bank of America and Zoomd Technologies

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

The idea behind Bank of America and Zoomd Technologies 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.