Correlation Between B of A and DAIMLER AG

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Can any of the company-specific risk be diversified away by investing in both B of A and DAIMLER AG 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 B of A and DAIMLER AG 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 DAIMLER AG, you can compare the effects of market volatilities on B of A and DAIMLER AG 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 B of A with a short position of DAIMLER AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of B of A and DAIMLER AG.

Diversification Opportunities for B of A and DAIMLER AG

-0.21
  Correlation Coefficient

Very good diversification

The 3 months correlation between B of A and DAIMLER is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bank Of America and DAIMLER AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAIMLER AG and B of A 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 DAIMLER AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAIMLER AG has no effect on the direction of B of A i.e., B of A and DAIMLER AG go up and down completely randomly.

Pair Corralation between B of A and DAIMLER AG

If you would invest  3,165  in Bank Of America on July 7, 2022 and sell it today you would earn a total of  73.00  from holding Bank Of America or generate 2.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Bank Of America  vs.  DAIMLER AG

 Performance (%) 
       Timeline  
Bank Of America 
B of A Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bank Of America are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, B of A is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

B of A Price Channel

DAIMLER AG 
DAIMLER Performance
0 of 100
Over the last 90 days DAIMLER AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, DAIMLER AG is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

B of A and DAIMLER AG Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with B of A and DAIMLER AG

The main advantage of trading using opposite B of A and DAIMLER AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B of A position performs unexpectedly, DAIMLER AG 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 DAIMLER AG will offset losses from the drop in DAIMLER AG's long position.
B of A vs. Amazon Inc
The idea behind Bank Of America and DAIMLER AG 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.
DAIMLER AG vs. Amazon Inc
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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