Correlation Between Bank of America and Unity Software
Can any of the company-specific risk be diversified away by investing in both Bank of America and Unity Software 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 Unity Software 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 Unity Software, you can compare the effects of market volatilities on Bank of America and Unity Software 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 Unity Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Unity Software.
Diversification Opportunities for Bank of America and Unity Software
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Unity is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Unity Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity Software 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 Unity Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unity Software has no effect on the direction of Bank of America i.e., Bank of America and Unity Software go up and down completely randomly.
Pair Corralation between Bank of America and Unity Software
Considering the 90-day investment horizon Bank of America is expected to generate 0.86 times more return on investment than Unity Software. However, Bank of America is 1.17 times less risky than Unity Software. It trades about 0.08 of its potential returns per unit of risk. Unity Software is currently generating about -0.43 per unit of risk. If you would invest 3,686 in Bank of America on January 24, 2024 and sell it today you would earn a total of 87.00 from holding Bank of America or generate 2.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Bank of America vs. Unity Software
Performance |
Timeline |
Bank of America |
Unity Software |
Bank of America and Unity Software Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of America and Unity Software
The main advantage of trading using opposite Bank of America and Unity Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Unity Software 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 Unity Software will offset losses from the drop in Unity Software'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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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