Correlation Between Bank of America and GSD Holding
Can any of the company-specific risk be diversified away by investing in both Bank of America and GSD Holding 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 GSD Holding 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 GSD Holding AS, you can compare the effects of market volatilities on Bank of America and GSD Holding 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 GSD Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and GSD Holding.
Diversification Opportunities for Bank of America and GSD Holding
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bank and GSD is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and GSD Holding AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSD Holding AS 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 GSD Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSD Holding AS has no effect on the direction of Bank of America i.e., Bank of America and GSD Holding go up and down completely randomly.
Pair Corralation between Bank of America and GSD Holding
Considering the 90-day investment horizon Bank of America is expected to generate 1.32 times less return on investment than GSD Holding. In addition to that, Bank of America is 1.37 times more volatile than GSD Holding AS. It trades about 0.22 of its total potential returns per unit of risk. GSD Holding AS is currently generating about 0.4 per unit of volatility. If you would invest 345.00 in GSD Holding AS on August 25, 2024 and sell it today you would earn a total of 46.00 from holding GSD Holding AS or generate 13.33% 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. GSD Holding AS
Performance |
| Timeline |
| Bank of America |
| GSD Holding AS |
Bank of America and GSD Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and GSD Holding
The main advantage of trading using opposite Bank of America and GSD Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, GSD Holding 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 GSD Holding will offset losses from the drop in GSD Holding's long position.| Bank of America vs. Amtech Systems | Bank of America vs. Gold Fields Ltd | Bank of America vs. Aegean Airlines SA | Bank of America vs. Merck Company |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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