Correlation Between Genuine Parts and B of A

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Can any of the company-specific risk be diversified away by investing in both Genuine Parts and B of A 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 Genuine Parts and B of A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genuine Parts and Bank Of America, you can compare the effects of market volatilities on Genuine Parts and B of A 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 Genuine Parts with a short position of B of A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genuine Parts and B of A.

Diversification Opportunities for Genuine Parts and B of A

0.15
  Correlation Coefficient

Average diversification

The 3 months correlation between Genuine and B of A is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Genuine Parts and Bank Of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Of America and Genuine Parts 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 Genuine Parts are associated (or correlated) with B of A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Of America has no effect on the direction of Genuine Parts i.e., Genuine Parts and B of A go up and down completely randomly.

Pair Corralation between Genuine Parts and B of A

Considering the 90-day investment horizon Genuine Parts is expected to generate 0.76 times more return on investment than B of A. However, Genuine Parts is 1.32 times less risky than B of A. It trades about 0.51 of its potential returns per unit of risk. Bank Of America is currently generating about 0.35 per unit of risk. If you would invest  13,854  in Genuine Parts on May 16, 2022 and sell it today you would earn a total of  1,956  from holding Genuine Parts or generate 14.12% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Genuine Parts  vs.  Bank Of America

 Performance (%) 
       Timeline  
Genuine Parts 
Genuine Performance
12 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Genuine Parts are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Genuine Parts sustained solid returns over the last few months and may actually be approaching a breakup point.

Genuine Price Channel

Bank Of America 
B of A Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bank Of America are ranked lower than 3 (%) 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 new stock price disturbance, may contribute to short-term losses for the investors.

B of A Price Channel

Genuine Parts and B of A Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Genuine Parts and B of A

The main advantage of trading using opposite Genuine Parts and B of A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genuine Parts position performs unexpectedly, B of A 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 B of A will offset losses from the drop in B of A's long position.
The idea behind Genuine Parts and Bank Of America 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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