Correlation Between Bank of America and Great Wes
Can any of the company-specific risk be diversified away by investing in both Bank of America and Great Wes 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 Great Wes 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 Great Wes 515, you can compare the effects of market volatilities on Bank of America and Great Wes 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 Great Wes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Great Wes.
Diversification Opportunities for Bank of America and Great Wes
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Great is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Great Wes 515 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Wes 515 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 Great Wes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Wes 515 has no effect on the direction of Bank of America i.e., Bank of America and Great Wes go up and down completely randomly.
Pair Corralation between Bank of America and Great Wes
Considering the 90-day investment horizon Bank of America is expected to generate 2.35 times more return on investment than Great Wes. However, Bank of America is 2.35 times more volatile than Great Wes 515. It trades about 0.14 of its potential returns per unit of risk. Great Wes 515 is currently generating about 0.11 per unit of risk. If you would invest 2,597 in Bank of America on August 25, 2024 and sell it today you would earn a total of 2,103 from holding Bank of America or generate 80.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.66% |
| Values | Daily Returns |
Bank of America vs. Great Wes 515
Performance |
| Timeline |
| Bank of America |
| Great Wes 515 |
Bank of America and Great Wes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Great Wes
The main advantage of trading using opposite Bank of America and Great Wes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Great Wes 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 Great Wes will offset losses from the drop in Great Wes' 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 |
| Great Wes vs. National Bank of | Great Wes vs. Laurentian Bank | Great Wes vs. iA Financial | Great Wes vs. Bird Construction |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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