Correlation Between Bank of America and GFL ENVIRONM
Can any of the company-specific risk be diversified away by investing in both Bank of America and GFL ENVIRONM 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 GFL ENVIRONM 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 GFL ENVIRONM, you can compare the effects of market volatilities on Bank of America and GFL ENVIRONM 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 GFL ENVIRONM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and GFL ENVIRONM.
Diversification Opportunities for Bank of America and GFL ENVIRONM
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and GFL is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and GFL ENVIRONM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GFL ENVIRONM 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 GFL ENVIRONM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GFL ENVIRONM has no effect on the direction of Bank of America i.e., Bank of America and GFL ENVIRONM go up and down completely randomly.
Pair Corralation between Bank of America and GFL ENVIRONM
Considering the 90-day investment horizon Bank of America is expected to generate 1.25 times less return on investment than GFL ENVIRONM. But when comparing it to its historical volatility, Bank of America is 1.2 times less risky than GFL ENVIRONM. It trades about 0.05 of its potential returns per unit of risk. GFL ENVIRONM is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,771 in GFL ENVIRONM on August 24, 2024 and sell it today you would earn a total of 1,569 from holding GFL ENVIRONM or generate 56.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.22% |
| Values | Daily Returns |
Bank of America vs. GFL ENVIRONM
Performance |
| Timeline |
| Bank of America |
| GFL ENVIRONM |
Bank of America and GFL ENVIRONM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and GFL ENVIRONM
The main advantage of trading using opposite Bank of America and GFL ENVIRONM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, GFL ENVIRONM 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 GFL ENVIRONM will offset losses from the drop in GFL ENVIRONM's long position.| Bank of America vs. Amtech Systems | Bank of America vs. Gold Fields Ltd | Bank of America vs. Aegean Airlines SA | Bank of America vs. Merck Company |
| GFL ENVIRONM vs. HEALTHCARE REAL A | GFL ENVIRONM vs. Transportadora de Gas | GFL ENVIRONM vs. Texas Roadhouse | GFL ENVIRONM vs. ATRYS HEALTH SA |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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