Correlation Between Bank of America and GR Silver
Can any of the company-specific risk be diversified away by investing in both Bank of America and GR Silver 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 GR Silver 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 GR Silver Mining, you can compare the effects of market volatilities on Bank of America and GR Silver 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 GR Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and GR Silver.
Diversification Opportunities for Bank of America and GR Silver
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and GRSLF is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and GR Silver Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GR Silver Mining 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 GR Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GR Silver Mining has no effect on the direction of Bank of America i.e., Bank of America and GR Silver go up and down completely randomly.
Pair Corralation between Bank of America and GR Silver
Considering the 90-day investment horizon Bank of America is expected to generate 3.35 times less return on investment than GR Silver. But when comparing it to its historical volatility, Bank of America is 4.84 times less risky than GR Silver. It trades about 0.06 of its potential returns per unit of risk. GR Silver Mining is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 11.00 in GR Silver Mining on September 2, 2024 and sell it today you would earn a total of 3.00 from holding GR Silver Mining or generate 27.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. GR Silver Mining
Performance |
| Timeline |
| Bank of America |
| GR Silver Mining |
Bank of America and GR Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and GR Silver
The main advantage of trading using opposite Bank of America and GR Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, GR Silver 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 GR Silver will offset losses from the drop in GR Silver's 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 |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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