Correlation Between Bank of America and Generation Asia
Can any of the company-specific risk be diversified away by investing in both Bank of America and Generation Asia 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 Generation Asia 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 Generation Asia I, you can compare the effects of market volatilities on Bank of America and Generation Asia 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 Generation Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Generation Asia.
Diversification Opportunities for Bank of America and Generation Asia
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Generation is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Generation Asia I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generation Asia I 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 Generation Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generation Asia I has no effect on the direction of Bank of America i.e., Bank of America and Generation Asia go up and down completely randomly.
Pair Corralation between Bank of America and Generation Asia
Considering the 90-day investment horizon Bank of America is expected to generate 6.65 times more return on investment than Generation Asia. However, Bank of America is 6.65 times more volatile than Generation Asia I. It trades about 0.1 of its potential returns per unit of risk. Generation Asia I is currently generating about 0.05 per unit of risk. If you would invest 3,946 in Bank of America on September 3, 2024 and sell it today you would earn a total of 805.00 from holding Bank of America or generate 20.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 89.6% |
| Values | Daily Returns |
Bank of America vs. Generation Asia I
Performance |
| Timeline |
| Bank of America |
| Generation Asia I |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Bank of America and Generation Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Generation Asia
The main advantage of trading using opposite Bank of America and Generation Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Generation Asia 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 Generation Asia will offset losses from the drop in Generation Asia'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 |
| Generation Asia vs. Green Planet Bio | Generation Asia vs. Opus Magnum Ameris | Generation Asia vs. Azure Holding Group | Generation Asia vs. Four Leaf Acquisition |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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