Correlation Between Bank of America and NSC Groupe
Can any of the company-specific risk be diversified away by investing in both Bank of America and NSC Groupe 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 NSC Groupe 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 NSC Groupe SA, you can compare the effects of market volatilities on Bank of America and NSC Groupe 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 NSC Groupe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and NSC Groupe.
Diversification Opportunities for Bank of America and NSC Groupe
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and NSC is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and NSC Groupe SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSC Groupe SA 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 NSC Groupe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSC Groupe SA has no effect on the direction of Bank of America i.e., Bank of America and NSC Groupe go up and down completely randomly.
Pair Corralation between Bank of America and NSC Groupe
Considering the 90-day investment horizon Bank of America is expected to generate 0.53 times more return on investment than NSC Groupe. However, Bank of America is 1.88 times less risky than NSC Groupe. It trades about 0.31 of its potential returns per unit of risk. NSC Groupe SA is currently generating about -0.12 per unit of risk. If you would invest 4,182 in Bank of America on September 1, 2024 and sell it today you would earn a total of 569.00 from holding Bank of America or generate 13.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of America vs. NSC Groupe SA
Performance |
| Timeline |
| Bank of America |
| NSC Groupe SA |
Bank of America and NSC Groupe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and NSC Groupe
The main advantage of trading using opposite Bank of America and NSC Groupe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, NSC Groupe 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 NSC Groupe will offset losses from the drop in NSC Groupe'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 |
| NSC Groupe vs. Technip Energies BV | NSC Groupe vs. Credit Agricole SA | NSC Groupe vs. Mauna Kea Technologies | NSC Groupe vs. Eutelsat Communications 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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