Correlation Between Bank of America and Green Resources
Can any of the company-specific risk be diversified away by investing in both Bank of America and Green Resources 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 Green Resources 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 Green Resources Public, you can compare the effects of market volatilities on Bank of America and Green Resources 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 Green Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Green Resources.
Diversification Opportunities for Bank of America and Green Resources
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bank and Green is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Green Resources Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Resources Public 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 Green Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Resources Public has no effect on the direction of Bank of America i.e., Bank of America and Green Resources go up and down completely randomly.
Pair Corralation between Bank of America and Green Resources
Considering the 90-day investment horizon Bank of America is expected to generate 20.5 times less return on investment than Green Resources. But when comparing it to its historical volatility, Bank of America is 43.84 times less risky than Green Resources. It trades about 0.13 of its potential returns per unit of risk. Green Resources Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 73.00 in Green Resources Public on September 2, 2024 and sell it today you would earn a total of 38.00 from holding Green Resources Public or generate 52.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.18% |
| Values | Daily Returns |
Bank of America vs. Green Resources Public
Performance |
| Timeline |
| Bank of America |
| Green Resources Public |
Bank of America and Green Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Green Resources
The main advantage of trading using opposite Bank of America and Green Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Green Resources 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 Green Resources will offset losses from the drop in Green Resources' long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Green Resources vs. Ekarat Engineering Public | Green Resources vs. Global Power Synergy | Green Resources vs. BCPG Public | Green Resources vs. IRPC Public |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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