Correlation Between Bank of America and Silvercorp Metals
Can any of the company-specific risk be diversified away by investing in both Bank of America and Silvercorp 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 Silvercorp Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and Silvercorp Metals, you can compare the effects of market volatilities on Bank of America and Silvercorp 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 Silvercorp Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Silvercorp Metals.
Diversification Opportunities for Bank of America and Silvercorp Metals
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Silvercorp is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Silvercorp Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvercorp Metals 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 Silvercorp Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silvercorp Metals has no effect on the direction of Bank of America i.e., Bank of America and Silvercorp Metals go up and down completely randomly.
Pair Corralation between Bank of America and Silvercorp Metals
Assuming the 90 days trading horizon Verizon Communications is expected to generate 0.42 times more return on investment than Silvercorp Metals. However, Verizon Communications is 2.41 times less risky than Silvercorp Metals. It trades about -0.21 of its potential returns per unit of risk. Silvercorp Metals is currently generating about -0.13 per unit of risk. If you would invest 4,049 in Verizon Communications on September 22, 2024 and sell it today you would lose (191.00) from holding Verizon Communications or give up 4.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. Silvercorp Metals
Performance |
| Timeline |
| Verizon Communications |
| Silvercorp Metals |
Bank of America and Silvercorp Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Silvercorp Metals
The main advantage of trading using opposite Bank of America and Silvercorp Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Silvercorp 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 Silvercorp Metals will offset losses from the drop in Silvercorp Metals' long position.| Bank of America vs. Apple Inc | Bank of America vs. Apple Inc | Bank of America vs. Apple Inc | Bank of America vs. Apple Inc |
| Silvercorp Metals vs. Ares Management Corp | Silvercorp Metals vs. ALTAIR RES INC | Silvercorp Metals vs. Brockhaus Capital Management | Silvercorp Metals vs. Air New Zealand |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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