Correlation Between Bank of America and Expedia
Can any of the company-specific risk be diversified away by investing in both Bank of America and Expedia 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 Expedia 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 Expedia Group, you can compare the effects of market volatilities on Bank of America and Expedia 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 Expedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Expedia.
Diversification Opportunities for Bank of America and Expedia
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Expedia is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Expedia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expedia Group 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 Expedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expedia Group has no effect on the direction of Bank of America i.e., Bank of America and Expedia go up and down completely randomly.
Pair Corralation between Bank of America and Expedia
Considering the 90-day investment horizon Bank of America is expected to generate 0.6 times more return on investment than Expedia. However, Bank of America is 1.66 times less risky than Expedia. It trades about 0.29 of its potential returns per unit of risk. Expedia Group is currently generating about 0.09 per unit of risk. If you would invest 4,306 in Bank of America on March 23, 2025 and sell it today you would earn a total of 244.00 from holding Bank of America or generate 5.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Expedia Group
Performance |
| Timeline |
| Bank of America |
| Expedia Group |
Bank of America and Expedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Expedia
The main advantage of trading using opposite Bank of America and Expedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Expedia 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 Expedia will offset losses from the drop in Expedia'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 |
| Expedia vs. Hyatt Hotels | Expedia vs. Biglari Holdings | Expedia vs. Smart Share Global | Expedia vs. Sweetgreen |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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