Correlation Between Bank of America and Bactiquant
Can any of the company-specific risk be diversified away by investing in both Bank of America and Bactiquant 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 Bactiquant 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 Bactiquant AS, you can compare the effects of market volatilities on Bank of America and Bactiquant 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 Bactiquant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Bactiquant.
Diversification Opportunities for Bank of America and Bactiquant
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Bactiquant is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Bactiquant AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bactiquant AS 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 Bactiquant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bactiquant AS has no effect on the direction of Bank of America i.e., Bank of America and Bactiquant go up and down completely randomly.
Pair Corralation between Bank of America and Bactiquant
Considering the 90-day investment horizon Bank of America is expected to generate 2.02 times less return on investment than Bactiquant. But when comparing it to its historical volatility, Bank of America is 5.49 times less risky than Bactiquant. It trades about 0.13 of its potential returns per unit of risk. Bactiquant AS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 320.00 in Bactiquant AS on August 29, 2024 and sell it today you would earn a total of 60.00 from holding Bactiquant AS or generate 18.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.52% |
| Values | Daily Returns |
Bank of America vs. Bactiquant AS
Performance |
| Timeline |
| Bank of America |
| Bactiquant AS |
Bank of America and Bactiquant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Bactiquant
The main advantage of trading using opposite Bank of America and Bactiquant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Bactiquant 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 Bactiquant will offset losses from the drop in Bactiquant'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 |
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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.
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