Correlation Between Bank of America and 2020 Bulkers
Can any of the company-specific risk be diversified away by investing in both Bank of America and 2020 Bulkers 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 2020 Bulkers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and 2020 Bulkers, you can compare the effects of market volatilities on Bank of America and 2020 Bulkers 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 2020 Bulkers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and 2020 Bulkers.
Diversification Opportunities for Bank of America and 2020 Bulkers
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and 2020 is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and 2020 Bulkers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2020 Bulkers 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 2020 Bulkers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2020 Bulkers has no effect on the direction of Bank of America i.e., Bank of America and 2020 Bulkers go up and down completely randomly.
Pair Corralation between Bank of America and 2020 Bulkers
Considering the 90-day investment horizon Bank of America is expected to generate 0.83 times more return on investment than 2020 Bulkers. However, Bank of America is 1.21 times less risky than 2020 Bulkers. It trades about 0.27 of its potential returns per unit of risk. 2020 Bulkers is currently generating about 0.05 per unit of risk. If you would invest 4,262 in Bank of America on August 29, 2024 and sell it today you would earn a total of 513.00 from holding Bank of America or generate 12.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. 2020 Bulkers
Performance |
| Timeline |
| Bank of America |
| 2020 Bulkers |
Bank of America and 2020 Bulkers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and 2020 Bulkers
The main advantage of trading using opposite Bank of America and 2020 Bulkers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, 2020 Bulkers 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 2020 Bulkers will offset losses from the drop in 2020 Bulkers' long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Nova |
| 2020 Bulkers vs. Shelf Drilling | 2020 Bulkers vs. Solstad Offsho | 2020 Bulkers vs. Eidesvik Offshore ASA | 2020 Bulkers vs. Elkem ASA |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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