Correlation Between Bank of America and Graphano Energy
Can any of the company-specific risk be diversified away by investing in both Bank of America and Graphano Energy 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 Graphano Energy 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 Graphano Energy, you can compare the effects of market volatilities on Bank of America and Graphano Energy 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 Graphano Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Graphano Energy.
Diversification Opportunities for Bank of America and Graphano Energy
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bank and Graphano is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Graphano Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphano Energy 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 Graphano Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphano Energy has no effect on the direction of Bank of America i.e., Bank of America and Graphano Energy go up and down completely randomly.
Pair Corralation between Bank of America and Graphano Energy
Considering the 90-day investment horizon Bank of America is expected to under-perform the Graphano Energy. But the stock apears to be less risky and, when comparing its historical volatility, Bank of America is 11.56 times less risky than Graphano Energy. The stock trades about -0.36 of its potential returns per unit of risk. The Graphano Energy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Graphano Energy on November 28, 2024 and sell it today you would earn a total of 0.00 from holding Graphano Energy or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of America vs. Graphano Energy
Performance |
| Timeline |
| Bank of America |
| Graphano Energy |
Bank of America and Graphano Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Graphano Energy
The main advantage of trading using opposite Bank of America and Graphano Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Graphano Energy 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 Graphano Energy will offset losses from the drop in Graphano Energy'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 |
| Graphano Energy vs. Generation Mining Limited | Graphano Energy vs. Northern Graphite | Graphano Energy vs. Western Resources Corp | Graphano Energy vs. Cypress Development Corp |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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