Correlation Between Bank of America and ATLANTIC PETROLPF
Can any of the company-specific risk be diversified away by investing in both Bank of America and ATLANTIC PETROLPF 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 ATLANTIC PETROLPF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and ATLANTIC PETROLPF DK, you can compare the effects of market volatilities on Bank of America and ATLANTIC PETROLPF 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 ATLANTIC PETROLPF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and ATLANTIC PETROLPF.
Diversification Opportunities for Bank of America and ATLANTIC PETROLPF
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and ATLANTIC is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and ATLANTIC PETROLPF DK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATLANTIC PETROLPF 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 ATLANTIC PETROLPF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATLANTIC PETROLPF has no effect on the direction of Bank of America i.e., Bank of America and ATLANTIC PETROLPF go up and down completely randomly.
Pair Corralation between Bank of America and ATLANTIC PETROLPF
Assuming the 90 days trading horizon Verizon Communications is expected to generate 0.21 times more return on investment than ATLANTIC PETROLPF. However, Verizon Communications is 4.66 times less risky than ATLANTIC PETROLPF. It trades about 0.5 of its potential returns per unit of risk. ATLANTIC PETROLPF DK is currently generating about -0.22 per unit of risk. If you would invest 3,774 in Verizon Communications on September 3, 2024 and sell it today you would earn a total of 411.00 from holding Verizon Communications or generate 10.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. ATLANTIC PETROLPF DK
Performance |
| Timeline |
| Verizon Communications |
| ATLANTIC PETROLPF |
Bank of America and ATLANTIC PETROLPF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and ATLANTIC PETROLPF
The main advantage of trading using opposite Bank of America and ATLANTIC PETROLPF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, ATLANTIC PETROLPF 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 ATLANTIC PETROLPF will offset losses from the drop in ATLANTIC PETROLPF's long position.| Bank of America vs. UNIVMUSIC GRPADR050 | Bank of America vs. ON SEMICONDUCTOR | Bank of America vs. CDN IMPERIAL BANK | Bank of America vs. CHIBA BANK |
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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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