Correlation Between Bank of America and Falcon Gold
Can any of the company-specific risk be diversified away by investing in both Bank of America and Falcon 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 Falcon 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 Falcon Gold Corp, you can compare the effects of market volatilities on Bank of America and Falcon 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 Falcon Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Falcon Gold.
Diversification Opportunities for Bank of America and Falcon Gold
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Falcon is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Falcon Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon 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 Falcon Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Gold Corp has no effect on the direction of Bank of America i.e., Bank of America and Falcon Gold go up and down completely randomly.
Pair Corralation between Bank of America and Falcon Gold
Considering the 90-day investment horizon Bank of America is expected to generate 4.47 times less return on investment than Falcon Gold. But when comparing it to its historical volatility, Bank of America is 6.56 times less risky than Falcon Gold. It trades about 0.06 of its potential returns per unit of risk. Falcon Gold Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4.84 in Falcon Gold Corp on November 19, 2024 and sell it today you would lose (2.18) from holding Falcon Gold Corp or give up 45.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Bank of America vs. Falcon Gold Corp
Performance |
| Timeline |
| Bank of America |
| Falcon Gold Corp |
Bank of America and Falcon Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Falcon Gold
The main advantage of trading using opposite Bank of America and Falcon Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Falcon 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 Falcon Gold will offset losses from the drop in Falcon 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 |
| Falcon Gold vs. Altamira Gold Corp | Falcon Gold vs. Precipitate Gold Corp | Falcon Gold vs. KORE Mining | Falcon Gold vs. Puma Exploration |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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