Correlation Between Bank of America and G Medical
Can any of the company-specific risk be diversified away by investing in both Bank of America and G Medical 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 G Medical 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 G Medical Innovations, you can compare the effects of market volatilities on Bank of America and G Medical 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 G Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and G Medical.
Diversification Opportunities for Bank of America and G Medical
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and GMVDW is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and G Medical Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G Medical Innovations 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 G Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G Medical Innovations has no effect on the direction of Bank of America i.e., Bank of America and G Medical go up and down completely randomly.
Pair Corralation between Bank of America and G Medical
Considering the 90-day investment horizon Bank of America is expected to generate 85.51 times less return on investment than G Medical. But when comparing it to its historical volatility, Bank of America is 42.02 times less risky than G Medical. It trades about 0.06 of its potential returns per unit of risk. G Medical Innovations is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 167.00 in G Medical Innovations on September 3, 2024 and sell it today you would earn a total of 234.00 from holding G Medical Innovations or generate 140.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 24.65% |
| Values | Daily Returns |
Bank of America vs. G Medical Innovations
Performance |
| Timeline |
| Bank of America |
| G Medical Innovations |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank of America and G Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and G Medical
The main advantage of trading using opposite Bank of America and G Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, G Medical 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 G Medical will offset losses from the drop in G Medical'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 |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |