Correlation Between Bank of America and Forsys Metals
Can any of the company-specific risk be diversified away by investing in both Bank of America and Forsys Metals 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 Forsys Metals 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 Forsys Metals Corp, you can compare the effects of market volatilities on Bank of America and Forsys Metals 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 Forsys Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Forsys Metals.
Diversification Opportunities for Bank of America and Forsys Metals
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Forsys is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Forsys Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forsys Metals Corp 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 Forsys Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forsys Metals Corp has no effect on the direction of Bank of America i.e., Bank of America and Forsys Metals go up and down completely randomly.
Pair Corralation between Bank of America and Forsys Metals
Assuming the 90 days trading horizon Bank of America is expected to generate 5.39 times less return on investment than Forsys Metals. But when comparing it to its historical volatility, Bank of America is 7.58 times less risky than Forsys Metals. It trades about 0.07 of its potential returns per unit of risk. Forsys Metals Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 31.00 in Forsys Metals Corp on August 29, 2024 and sell it today you would earn a total of 17.00 from holding Forsys Metals Corp or generate 54.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Forsys Metals Corp
Performance |
| Timeline |
| Bank of America |
| Forsys Metals Corp |
Bank of America and Forsys Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Forsys Metals
The main advantage of trading using opposite Bank of America and Forsys Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Forsys Metals 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 Forsys Metals will offset losses from the drop in Forsys Metals' long position.| Bank of America vs. LENSAR Inc | Bank of America vs. Microbot Medical | Bank of America vs. Meiwu Technology Co | Bank of America vs. Merit Medical Systems |
| Forsys Metals vs. Petroleo Brasileiro Petrobras | Forsys Metals vs. Equinor ASA ADR | Forsys Metals vs. Eni SpA ADR | Forsys Metals vs. YPF Sociedad Anonima |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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