Correlation Between Bank of America and Lynas Rare
Can any of the company-specific risk be diversified away by investing in both Bank of America and Lynas Rare 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 Lynas Rare 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 Lynas Rare Earths, you can compare the effects of market volatilities on Bank of America and Lynas Rare 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 Lynas Rare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Lynas Rare.
Diversification Opportunities for Bank of America and Lynas Rare
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and Lynas is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Lynas Rare Earths in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lynas Rare Earths 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 Lynas Rare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lynas Rare Earths has no effect on the direction of Bank of America i.e., Bank of America and Lynas Rare go up and down completely randomly.
Pair Corralation between Bank of America and Lynas Rare
Considering the 90-day investment horizon Bank of America is expected to generate 0.93 times more return on investment than Lynas Rare. However, Bank of America is 1.08 times less risky than Lynas Rare. It trades about 0.31 of its potential returns per unit of risk. Lynas Rare Earths is currently generating about -0.23 per unit of risk. If you would invest 4,182 in Bank of America on September 1, 2024 and sell it today you would earn a total of 569.00 from holding Bank of America or generate 13.61% 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. Lynas Rare Earths
Performance |
| Timeline |
| Bank of America |
| Lynas Rare Earths |
Bank of America and Lynas Rare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Lynas Rare
The main advantage of trading using opposite Bank of America and Lynas Rare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Lynas Rare 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 Lynas Rare will offset losses from the drop in Lynas Rare'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 |
| Lynas Rare vs. Aclara Resources | Lynas Rare vs. Anson Resources Limited | Lynas Rare vs. CDN Maverick Capital | Lynas Rare vs. Boliden AB ADR |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |