Correlation Between Bank of America and Asante Gold
Can any of the company-specific risk be diversified away by investing in both Bank of America and Asante Gold 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 Asante Gold 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 Asante Gold, you can compare the effects of market volatilities on Bank of America and Asante Gold 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 Asante Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Asante Gold.
Diversification Opportunities for Bank of America and Asante Gold
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Asante is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Asante Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asante Gold 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 Asante Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asante Gold has no effect on the direction of Bank of America i.e., Bank of America and Asante Gold go up and down completely randomly.
Pair Corralation between Bank of America and Asante Gold
Considering the 90-day investment horizon Bank of America is expected to generate 0.76 times more return on investment than Asante Gold. However, Bank of America is 1.31 times less risky than Asante Gold. It trades about 0.26 of its potential returns per unit of risk. Asante Gold is currently generating about -0.23 per unit of risk. If you would invest 3,968 in Bank of America on August 29, 2024 and sell it today you would earn a total of 817.50 from holding Bank of America or generate 20.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Bank of America vs. Asante Gold
Performance |
| Timeline |
| Bank of America |
| Asante Gold |
Bank of America and Asante Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Asante Gold
The main advantage of trading using opposite Bank of America and Asante Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Asante Gold 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 Asante Gold will offset losses from the drop in Asante Gold'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. JPMorgan Chase Co |
| Asante Gold vs. Minnova Corp | Asante Gold vs. Argo Gold | Asante Gold vs. Advance Gold Corp | Asante Gold vs. Blue Star Gold |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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