Correlation Between Bank of America and Grand Plastic
Can any of the company-specific risk be diversified away by investing in both Bank of America and Grand Plastic 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 Grand Plastic 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 Grand Plastic Technology, you can compare the effects of market volatilities on Bank of America and Grand Plastic 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 Grand Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Grand Plastic.
Diversification Opportunities for Bank of America and Grand Plastic
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Grand is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Grand Plastic Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Plastic Technology 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 Grand Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Plastic Technology has no effect on the direction of Bank of America i.e., Bank of America and Grand Plastic go up and down completely randomly.
Pair Corralation between Bank of America and Grand Plastic
Considering the 90-day investment horizon Bank of America is expected to generate 2.63 times less return on investment than Grand Plastic. But when comparing it to its historical volatility, Bank of America is 2.68 times less risky than Grand Plastic. It trades about 0.1 of its potential returns per unit of risk. Grand Plastic Technology is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 50,967 in Grand Plastic Technology on September 2, 2024 and sell it today you would earn a total of 113,533 from holding Grand Plastic Technology or generate 222.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.39% |
| Values | Daily Returns |
Bank of America vs. Grand Plastic Technology
Performance |
| Timeline |
| Bank of America |
| Grand Plastic Technology |
Bank of America and Grand Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Grand Plastic
The main advantage of trading using opposite Bank of America and Grand Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Grand Plastic 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 Grand Plastic will offset losses from the drop in Grand Plastic's long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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