Correlation Between Bank of America and Amg Gwk
Can any of the company-specific risk be diversified away by investing in both Bank of America and Amg Gwk 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 Amg Gwk 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 Amg Gwk Small, you can compare the effects of market volatilities on Bank of America and Amg Gwk 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 Amg Gwk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Amg Gwk.
Diversification Opportunities for Bank of America and Amg Gwk
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Amg is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Amg Gwk Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Gwk Small 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 Amg Gwk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Gwk Small has no effect on the direction of Bank of America i.e., Bank of America and Amg Gwk go up and down completely randomly.
Pair Corralation between Bank of America and Amg Gwk
Considering the 90-day investment horizon Bank of America is expected to generate 1.27 times more return on investment than Amg Gwk. However, Bank of America is 1.27 times more volatile than Amg Gwk Small. It trades about 0.14 of its potential returns per unit of risk. Amg Gwk Small is currently generating about 0.1 per unit of risk. If you would invest 2,873 in Bank of America on August 24, 2024 and sell it today you would earn a total of 1,836 from holding Bank of America or generate 63.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Amg Gwk Small
Performance |
| Timeline |
| Bank of America |
| Amg Gwk Small |
Bank of America and Amg Gwk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Amg Gwk
The main advantage of trading using opposite Bank of America and Amg Gwk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Amg Gwk 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 Amg Gwk will offset losses from the drop in Amg Gwk'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 |
| Amg Gwk vs. T Rowe Price | Amg Gwk vs. Amg Gwk Small | Amg Gwk vs. Aberdeen Emerging Markts | Amg Gwk vs. Invesco Disciplined Equity |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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