Correlation Between Bank of America and NTG Nordic
Can any of the company-specific risk be diversified away by investing in both Bank of America and NTG Nordic 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 NTG Nordic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and NTG Nordic Transport, you can compare the effects of market volatilities on Bank of America and NTG Nordic 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 NTG Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and NTG Nordic.
Diversification Opportunities for Bank of America and NTG Nordic
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and NTG is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport 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 NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of Bank of America i.e., Bank of America and NTG Nordic go up and down completely randomly.
Pair Corralation between Bank of America and NTG Nordic
Assuming the 90 days trading horizon Verizon Communications is expected to generate 0.67 times more return on investment than NTG Nordic. However, Verizon Communications is 1.49 times less risky than NTG Nordic. It trades about 0.05 of its potential returns per unit of risk. NTG Nordic Transport is currently generating about -0.06 per unit of risk. If you would invest 3,599 in Verizon Communications on November 7, 2024 and sell it today you would earn a total of 225.00 from holding Verizon Communications or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. NTG Nordic Transport
Performance |
| Timeline |
| Verizon Communications |
| NTG Nordic Transport |
Bank of America and NTG Nordic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and NTG Nordic
The main advantage of trading using opposite Bank of America and NTG Nordic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, NTG Nordic 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 NTG Nordic will offset losses from the drop in NTG Nordic's long position.| Bank of America vs. ON SEMICONDUCTOR | Bank of America vs. KENEDIX OFFICE INV | Bank of America vs. PLAYMATES TOYS | Bank of America vs. CENTURIA OFFICE REIT |
| NTG Nordic vs. PLANT VEDA FOODS | NTG Nordic vs. ASURE SOFTWARE | NTG Nordic vs. NH Foods | NTG Nordic vs. SMA Solar Technology |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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