Correlation Between Bank of America and Cabral Gold
Can any of the company-specific risk be diversified away by investing in both Bank of America and Cabral 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 Cabral 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 Cabral Gold, you can compare the effects of market volatilities on Bank of America and Cabral 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 Cabral Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Cabral Gold.
Diversification Opportunities for Bank of America and Cabral Gold
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Cabral is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Cabral Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabral 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 Cabral Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabral Gold has no effect on the direction of Bank of America i.e., Bank of America and Cabral Gold go up and down completely randomly.
Pair Corralation between Bank of America and Cabral Gold
Considering the 90-day investment horizon Bank of America is expected to generate 6.13 times less return on investment than Cabral Gold. But when comparing it to its historical volatility, Bank of America is 5.33 times less risky than Cabral Gold. It trades about 0.06 of its potential returns per unit of risk. Cabral Gold is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 9.00 in Cabral Gold on November 19, 2024 and sell it today you would earn a total of 14.00 from holding Cabral Gold or generate 155.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Bank of America vs. Cabral Gold
Performance |
| Timeline |
| Bank of America |
| Cabral Gold |
Bank of America and Cabral Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Cabral Gold
The main advantage of trading using opposite Bank of America and Cabral Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Cabral 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 Cabral Gold will offset losses from the drop in Cabral 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. Royal Bank of |
| Cabral Gold vs. Puma Exploration | Cabral Gold vs. Endurance Gold | Cabral Gold vs. Red Pine Exploration | Cabral Gold vs. Fremont 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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