Correlation Between Bank of America and Gensource Potash
Can any of the company-specific risk be diversified away by investing in both Bank of America and Gensource Potash 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 Gensource Potash 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 Gensource Potash, you can compare the effects of market volatilities on Bank of America and Gensource Potash 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 Gensource Potash. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Gensource Potash.
Diversification Opportunities for Bank of America and Gensource Potash
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bank and Gensource is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Gensource Potash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gensource Potash 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 Gensource Potash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gensource Potash has no effect on the direction of Bank of America i.e., Bank of America and Gensource Potash go up and down completely randomly.
Pair Corralation between Bank of America and Gensource Potash
Considering the 90-day investment horizon Bank of America is expected to under-perform the Gensource Potash. But the stock apears to be less risky and, when comparing its historical volatility, Bank of America is 121.77 times less risky than Gensource Potash. The stock trades about -0.31 of its potential returns per unit of risk. The Gensource Potash is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Gensource Potash on November 27, 2024 and sell it today you would earn a total of 8.00 from holding Gensource Potash or generate 800.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Gensource Potash
Performance |
| Timeline |
| Bank of America |
| Gensource Potash |
Bank of America and Gensource Potash Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Gensource Potash
The main advantage of trading using opposite Bank of America and Gensource Potash positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Gensource Potash 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 Gensource Potash will offset losses from the drop in Gensource Potash's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
| Gensource Potash vs. Huntsman Exploration | Gensource Potash vs. Aurelia Metals Limited | Gensource Potash vs. Adriatic Metals PLC | Gensource Potash vs. American Helium |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |