Correlation Between Bank of America and Corporacion Aceros
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By analyzing existing cross correlation between Bank of America and Corporacion Aceros Arequipa, you can compare the effects of market volatilities on Bank of America and Corporacion Aceros 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 Corporacion Aceros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Corporacion Aceros.
Diversification Opportunities for Bank of America and Corporacion Aceros
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Corporacion is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Corporacion Aceros Arequipa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporacion Aceros 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 Corporacion Aceros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporacion Aceros has no effect on the direction of Bank of America i.e., Bank of America and Corporacion Aceros go up and down completely randomly.
Pair Corralation between Bank of America and Corporacion Aceros
Assuming the 90 days trading horizon Bank of America is expected to generate 2.38 times more return on investment than Corporacion Aceros. However, Bank of America is 2.38 times more volatile than Corporacion Aceros Arequipa. It trades about 0.34 of its potential returns per unit of risk. Corporacion Aceros Arequipa is currently generating about 0.35 per unit of risk. If you would invest 4,352 in Bank of America on October 20, 2024 and sell it today you would earn a total of 313.00 from holding Bank of America or generate 7.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 57.14% |
| Values | Daily Returns |
Bank of America vs. Corporacion Aceros Arequipa
Performance |
| Timeline |
| Bank of America |
| Corporacion Aceros |
Bank of America and Corporacion Aceros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Corporacion Aceros
The main advantage of trading using opposite Bank of America and Corporacion Aceros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Corporacion Aceros 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 Corporacion Aceros will offset losses from the drop in Corporacion Aceros' long position.The idea behind Bank of America and Corporacion Aceros Arequipa pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Corporacion Aceros vs. Corporacion Aceros Arequipa | Corporacion Aceros vs. Union de Cervecerias | Corporacion Aceros vs. Luz del Sur | Corporacion Aceros vs. Compania de Minas |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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