Correlation Between Bank of America and Jd Com Inc

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

Diversification Opportunities for Bank of America and Jd Com Inc

0.08

Correlation Coefficient

Bank of America  Jd Com Inc

Significant diversification

The 3 months correlation between Bank and JDCMF is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Jd Com Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jd Com Inc 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 Jd Com Inc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jd Com Inc has no effect on the direction of Bank of America i.e., Bank of America and Jd Com Inc go up and down completely randomly.

Pair Corralation between Bank of America and Jd Com Inc

Assuming the 90 days trading horizon Bank of America is expected to generate 0.14 times more return on investment than Jd Com Inc. However, Bank of America is 7.24 times less risky than Jd Com Inc. It trades about -0.08 of its potential returns per unit of risk. Jd Com Inc is currently generating about -0.02 per unit of risk. If you would invest  2,124  in Bank of America on May 3, 2025 and sell it today you would lose (65.00) from holding Bank of America or give up 3.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Bank of America  vs.  Jd Com Inc

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. Despite quite persistent essential indicators, Bank of America is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Jd Com Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jd Com Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Jd Com Inc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bank of America and Jd Com Inc

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

The idea behind Bank of America and Jd Com Inc 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.