Correlation Between Bank of America and Gourmet Master
Can any of the company-specific risk be diversified away by investing in both Bank of America and Gourmet Master 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 Gourmet Master 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 Gourmet Master Co, you can compare the effects of market volatilities on Bank of America and Gourmet Master 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 Gourmet Master. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Gourmet Master.
Diversification Opportunities for Bank of America and Gourmet Master
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Gourmet is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Gourmet Master Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gourmet Master 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 Gourmet Master. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gourmet Master has no effect on the direction of Bank of America i.e., Bank of America and Gourmet Master go up and down completely randomly.
Pair Corralation between Bank of America and Gourmet Master
Considering the 90-day investment horizon Bank of America is expected to generate 0.92 times more return on investment than Gourmet Master. However, Bank of America is 1.09 times less risky than Gourmet Master. It trades about 0.1 of its potential returns per unit of risk. Gourmet Master Co is currently generating about -0.07 per unit of risk. If you would invest 2,820 in Bank of America on August 31, 2024 and sell it today you would earn a total of 1,931 from holding Bank of America or generate 68.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.13% |
| Values | Daily Returns |
Bank of America vs. Gourmet Master Co
Performance |
| Timeline |
| Bank of America |
| Gourmet Master |
Bank of America and Gourmet Master Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Gourmet Master
The main advantage of trading using opposite Bank of America and Gourmet Master positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Gourmet Master 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 Gourmet Master will offset losses from the drop in Gourmet Master's long position.| Bank of America vs. RLJ Lodging Trust | Bank of America vs. Aquagold International | Bank of America vs. Stepstone Group | Bank of America vs. Morningstar Unconstrained Allocation |
| Gourmet Master vs. Chaintech Technology Corp | Gourmet Master vs. AVerMedia Technologies | Gourmet Master vs. Avision | Gourmet Master vs. Clevo Co |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |