Correlation Between Bank of America and TRIP GROUP

Can any of the company-specific risk be diversified away by investing in both Bank of America and TRIP GROUP 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 TRIP GROUP 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 TRIPCOM GROUP DL 00125, you can compare the effects of market volatilities on Bank of America and TRIP GROUP 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 TRIP GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and TRIP GROUP.

Diversification Opportunities for Bank of America and TRIP GROUP

-0.41

Correlation Coefficient

Bank of America  TRIP GROUP

Very good diversification

The 3 months correlation between Bank and TRIP is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and TRIPCOM GROUP DL 00125 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRIPCOM GROUP DL 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 TRIP GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRIPCOM GROUP DL has no effect on the direction of Bank of America i.e., Bank of America and TRIP GROUP go up and down completely randomly.

Pair Corralation between Bank of America and TRIP GROUP

Considering the 90-day investment horizon Bank of America is expected to generate 0.41 times more return on investment than TRIP GROUP. However, Bank of America is 2.42 times less risky than TRIP GROUP. It trades about 0.07 of its potential returns per unit of risk. TRIPCOM GROUP DL 00125 is currently generating about -0.04 per unit of risk. If you would invest  4,451  in Bank of America on May 18, 2025 and sell it today you would earn a total of  243.00  from holding Bank of America or generate 5.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.38%
Values	Daily Returns

Bank of America  vs.  TRIPCOM GROUP DL 00125

Bank of America

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of America are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Bank of America is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

TRIPCOM GROUP DL

Risk-Adjusted Performance

Weakest

Over the last 90 days TRIPCOM GROUP DL 00125 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Bank of America and TRIP GROUP

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

The idea behind Bank of America and TRIPCOM GROUP DL 00125 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 the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.