Correlation Between Bank of America and Avidian Gold
Can any of the company-specific risk be diversified away by investing in both Bank of America and Avidian 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 Avidian 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 Avidian Gold Corp, you can compare the effects of market volatilities on Bank of America and Avidian 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 Avidian Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Avidian Gold.
Diversification Opportunities for Bank of America and Avidian Gold
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Avidian is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Avidian Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avidian Gold Corp 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 Avidian Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avidian Gold Corp has no effect on the direction of Bank of America i.e., Bank of America and Avidian Gold go up and down completely randomly.
Pair Corralation between Bank of America and Avidian Gold
Considering the 90-day investment horizon Bank of America is expected to generate 3.08 times less return on investment than Avidian Gold. But when comparing it to its historical volatility, Bank of America is 9.65 times less risky than Avidian Gold. It trades about 0.1 of its potential returns per unit of risk. Avidian Gold Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Avidian Gold Corp on September 3, 2024 and sell it today you would lose (7.74) from holding Avidian Gold Corp or give up 45.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Bank of America vs. Avidian Gold Corp
Performance |
| Timeline |
| Bank of America |
| Avidian Gold Corp |
Bank of America and Avidian Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Avidian Gold
The main advantage of trading using opposite Bank of America and Avidian Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Avidian 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 Avidian Gold will offset losses from the drop in Avidian Gold's long position.| Bank of America vs. Partner Communications | Bank of America vs. Merck Company | Bank of America vs. Western Midstream Partners | Bank of America vs. Edgewise Therapeutics |
| Avidian Gold vs. Harmony Gold Mining | Avidian Gold vs. SPACE | Avidian Gold vs. T Rowe Price | Avidian Gold vs. Ampleforth |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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