Correlation Between Bank of America and Aarti Industries

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Bank of America and Aarti Industries 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 Aarti Industries 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 Aarti Industries Limited, you can compare the effects of market volatilities on Bank of America and Aarti Industries 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 Aarti Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Aarti Industries.

Diversification Opportunities for Bank of America and Aarti Industries

-0.88
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Bank and Aarti is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Aarti Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aarti Industries 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 Aarti Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aarti Industries has no effect on the direction of Bank of America i.e., Bank of America and Aarti Industries go up and down completely randomly.

Pair Corralation between Bank of America and Aarti Industries

Considering the 90-day investment horizon Bank of America is expected to generate 0.58 times more return on investment than Aarti Industries. However, Bank of America is 1.71 times less risky than Aarti Industries. It trades about 0.13 of its potential returns per unit of risk. Aarti Industries Limited is currently generating about -0.02 per unit of risk. If you would invest  3,022  in Bank of America on August 29, 2024 and sell it today you would earn a total of  1,753  from holding Bank of America or generate 58.01% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy97.58%
ValuesDaily Returns

Bank of America  vs.  Aarti Industries Limited

 Performance 
       Timeline  
Bank of America 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Bank of America are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Bank of America exhibited solid returns over the last few months and may actually be approaching a breakup point.
Aarti Industries 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Aarti Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Bank of America and Aarti Industries Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bank of America and Aarti Industries

The main advantage of trading using opposite Bank of America and Aarti Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Aarti Industries 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 Aarti Industries will offset losses from the drop in Aarti Industries' long position.
Bank of America vs. Nu Holdings
Bank of America vs. HSBC Holdings PLC
Bank of America vs. Bank of Nova
The idea behind Bank of America and Aarti Industries Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Aarti Industries vs. NMDC Limited
Aarti Industries vs. Steel Authority of
Aarti Industries vs. Embassy Office Parks
Aarti Industries vs. Gujarat Alkalies and
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

Other Complementary Tools

Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Portfolio Dashboard
Portfolio dashboard that provides centralized access to all your investments
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules


 
Macroaxis helps investors of all levels and skills to maximize the upside of all their holdings and minimize the risk associated with market volatility, economic swings, and company-specific events. View terms and conditions
 
Feedback Blog
Made with optimal in San Francisco
2024 Macroaxis LLC
COMMON DESTINATIONS
MAIN CATEGORIES
COMPANY