Correlation Between Bank of America and Algonquin Power
Can any of the company-specific risk be diversified away by investing in both Bank of America and Algonquin Power 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 Algonquin Power 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 Algonquin Power Utilities, you can compare the effects of market volatilities on Bank of America and Algonquin Power 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 Algonquin Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Algonquin Power.
Diversification Opportunities for Bank of America and Algonquin Power
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Algonquin is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Algonquin Power Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algonquin Power Utilities 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 Algonquin Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algonquin Power Utilities has no effect on the direction of Bank of America i.e., Bank of America and Algonquin Power go up and down completely randomly.
Pair Corralation between Bank of America and Algonquin Power
Considering the 90-day investment horizon Bank of America is expected to generate 0.79 times more return on investment than Algonquin Power. However, Bank of America is 1.26 times less risky than Algonquin Power. It trades about 0.11 of its potential returns per unit of risk. Algonquin Power Utilities is currently generating about -0.05 per unit of risk. If you would invest 2,806 in Bank of America on August 28, 2024 and sell it today you would earn a total of 1,944 from holding Bank of America or generate 69.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.88% |
| Values | Daily Returns |
Bank of America vs. Algonquin Power Utilities
Performance |
| Timeline |
| Bank of America |
| Algonquin Power Utilities |
Bank of America and Algonquin Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Algonquin Power
The main advantage of trading using opposite Bank of America and Algonquin Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Algonquin Power 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 Algonquin Power will offset losses from the drop in Algonquin Power's long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Nova |
| Algonquin Power vs. Superior Plus Corp | Algonquin Power vs. NMI Holdings | Algonquin Power vs. Origin Agritech | Algonquin Power vs. SIVERS SEMICONDUCTORS AB |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |