Correlation Between Bank of America and Globex Mining
Can any of the company-specific risk be diversified away by investing in both Bank of America and Globex Mining 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 Globex Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and Globex Mining Enterprises, you can compare the effects of market volatilities on Bank of America and Globex Mining 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 Globex Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Globex Mining.
Diversification Opportunities for Bank of America and Globex Mining
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Globex is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Globex Mining Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globex Mining Enterprises 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 Verizon Communications are associated (or correlated) with Globex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globex Mining Enterprises has no effect on the direction of Bank of America i.e., Bank of America and Globex Mining go up and down completely randomly.
Pair Corralation between Bank of America and Globex Mining
Assuming the 90 days trading horizon Bank of America is expected to generate 22.83 times less return on investment than Globex Mining. But when comparing it to its historical volatility, Verizon Communications is 1.65 times less risky than Globex Mining. It trades about 0.03 of its potential returns per unit of risk. Globex Mining Enterprises is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest 78.00 in Globex Mining Enterprises on October 29, 2024 and sell it today you would earn a total of 16.00 from holding Globex Mining Enterprises or generate 20.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. Globex Mining Enterprises
Performance |
| Timeline |
| Verizon Communications |
| Globex Mining Enterprises |
Bank of America and Globex Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Globex Mining
The main advantage of trading using opposite Bank of America and Globex Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Globex Mining 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 Globex Mining will offset losses from the drop in Globex Mining's long position.| Bank of America vs. MACOM Technology Solutions | Bank of America vs. AIR PRODCHEMICALS | Bank of America vs. Shin Etsu Chemical Co | Bank of America vs. SILICON LABORATOR |
| Globex Mining vs. Playtech plc | Globex Mining vs. ANGANG STEEL H | Globex Mining vs. Olympic Steel | Globex Mining vs. The Japan Steel |
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 Stocks Directory module to find actively traded stocks across global markets.
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