Correlation Between Bank of America and Ace Oldfields
Can any of the company-specific risk be diversified away by investing in both Bank of America and Ace Oldfields 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 Ace Oldfields 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 Ace Oldfields PT, you can compare the effects of market volatilities on Bank of America and Ace Oldfields 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 Ace Oldfields. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Ace Oldfields.
Diversification Opportunities for Bank of America and Ace Oldfields
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Ace is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Ace Oldfields PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ace Oldfields PT 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 Ace Oldfields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ace Oldfields PT has no effect on the direction of Bank of America i.e., Bank of America and Ace Oldfields go up and down completely randomly.
Pair Corralation between Bank of America and Ace Oldfields
Considering the 90-day investment horizon Bank of America is expected to generate 1.06 times more return on investment than Ace Oldfields. However, Bank of America is 1.06 times more volatile than Ace Oldfields PT. It trades about 0.27 of its potential returns per unit of risk. Ace Oldfields PT is currently generating about -0.18 per unit of risk. If you would invest 4,253 in Bank of America on August 30, 2024 and sell it today you would earn a total of 524.00 from holding Bank of America or generate 12.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bank of America vs. Ace Oldfields PT
Performance |
| Timeline |
| Bank of America |
| Ace Oldfields PT |
Bank of America and Ace Oldfields Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Ace Oldfields
The main advantage of trading using opposite Bank of America and Ace Oldfields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Ace Oldfields 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 Ace Oldfields will offset losses from the drop in Ace Oldfields' long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings |
| Ace Oldfields vs. Ladangbaja Murni PT | Ace Oldfields vs. PT Hasnur Internasional | Ace Oldfields vs. Geoprima Solusi Tbk | Ace Oldfields vs. Prima Andalan Mandiri |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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