Correlation Between Bank of America and Neste Oil
Can any of the company-specific risk be diversified away by investing in both Bank of America and Neste Oil 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 Neste Oil 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 Neste Oil Oyj, you can compare the effects of market volatilities on Bank of America and Neste Oil 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 Neste Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Neste Oil.
Diversification Opportunities for Bank of America and Neste Oil
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Neste is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Neste Oil Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neste Oil Oyj 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 Neste Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neste Oil Oyj has no effect on the direction of Bank of America i.e., Bank of America and Neste Oil go up and down completely randomly.
Pair Corralation between Bank of America and Neste Oil
Considering the 90-day investment horizon Bank of America is expected to generate 0.77 times more return on investment than Neste Oil. However, Bank of America is 1.29 times less risky than Neste Oil. It trades about 0.24 of its potential returns per unit of risk. Neste Oil Oyj is currently generating about -0.07 per unit of risk. If you would invest 4,262 in Bank of America on August 27, 2024 and sell it today you would earn a total of 438.00 from holding Bank of America or generate 10.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Neste Oil Oyj
Performance |
| Timeline |
| Bank of America |
| Neste Oil Oyj |
Bank of America and Neste Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Neste Oil
The main advantage of trading using opposite Bank of America and Neste Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Neste Oil 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 Neste Oil will offset losses from the drop in Neste Oil's long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal | Bank of America vs. Bank of Nova |
| Neste Oil vs. Fortum Oyj | Neste Oil vs. Sampo Oyj A | Neste Oil vs. Nordea Bank Abp | Neste Oil vs. UPM Kymmene Oyj |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Stocks Directory Find actively traded stocks across global markets |