Correlation Between Australian Agricultural and Bank of America
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and Bank of America 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 Australian Agricultural and Bank of America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and Verizon Communications, you can compare the effects of market volatilities on Australian Agricultural and Bank of America 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 Australian Agricultural with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and Bank of America.
Diversification Opportunities for Australian Agricultural and Bank of America
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Australian and Bank is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and Australian Agricultural 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 Australian Agricultural are associated (or correlated) with Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and Bank of America go up and down completely randomly.
Pair Corralation between Australian Agricultural and Bank of America
Assuming the 90 days horizon Australian Agricultural is expected to under-perform the Bank of America. But the stock apears to be less risky and, when comparing its historical volatility, Australian Agricultural is 1.35 times less risky than Bank of America. The stock trades about -0.21 of its potential returns per unit of risk. The Verizon Communications is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 3,791 in Verizon Communications on October 21, 2024 and sell it today you would lose (33.00) from holding Verizon Communications or give up 0.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Agricultural vs. Verizon Communications
Performance |
| Timeline |
| Australian Agricultural |
| Verizon Communications |
Australian Agricultural and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and Bank of America
The main advantage of trading using opposite Australian Agricultural and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.| Australian Agricultural vs. NetSol Technologies | Australian Agricultural vs. AAC TECHNOLOGHLDGADR | Australian Agricultural vs. SPECTRAL MEDICAL | Australian Agricultural vs. Peijia Medical Limited |
| Bank of America vs. RELIANCE STEEL AL | Bank of America vs. China Resources Beer | Bank of America vs. SIEM OFFSHORE NEW | Bank of America vs. Tianjin Capital Environmental |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |