Correlation Between Bank of America and Bitcoin Well
Can any of the company-specific risk be diversified away by investing in both Bank of America and Bitcoin Well 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 Bitcoin Well 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 Bitcoin Well, you can compare the effects of market volatilities on Bank of America and Bitcoin Well 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 Bitcoin Well. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Bitcoin Well.
Diversification Opportunities for Bank of America and Bitcoin Well
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Bitcoin is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Bitcoin Well in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin Well 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 Bitcoin Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin Well has no effect on the direction of Bank of America i.e., Bank of America and Bitcoin Well go up and down completely randomly.
Pair Corralation between Bank of America and Bitcoin Well
Considering the 90-day investment horizon Bank of America is expected to generate 6.31 times less return on investment than Bitcoin Well. But when comparing it to its historical volatility, Bank of America is 9.21 times less risky than Bitcoin Well. It trades about 0.16 of its potential returns per unit of risk. Bitcoin Well is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2.55 in Bitcoin Well on August 25, 2024 and sell it today you would earn a total of 13.45 from holding Bitcoin Well or generate 527.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Bitcoin Well
Performance |
| Timeline |
| Bank of America |
| Bitcoin Well |
Bank of America and Bitcoin Well Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Bitcoin Well
The main advantage of trading using opposite Bank of America and Bitcoin Well positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Bitcoin Well 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 Bitcoin Well will offset losses from the drop in Bitcoin Well's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Bitcoin Well vs. SPENN Technology AS | Bitcoin Well vs. Arcane Crypto AB | Bitcoin Well vs. OFX Group Ltd | Bitcoin Well vs. Blockmate Ventures |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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