Correlation Between Bank of America and Nexam Chemical
Can any of the company-specific risk be diversified away by investing in both Bank of America and Nexam Chemical 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 Nexam Chemical 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 Nexam Chemical Holding, you can compare the effects of market volatilities on Bank of America and Nexam Chemical 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 Nexam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Nexam Chemical.
Diversification Opportunities for Bank of America and Nexam Chemical
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Nexam is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Nexam Chemical Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexam Chemical Holding 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 Nexam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexam Chemical Holding has no effect on the direction of Bank of America i.e., Bank of America and Nexam Chemical go up and down completely randomly.
Pair Corralation between Bank of America and Nexam Chemical
Considering the 90-day investment horizon Bank of America is expected to generate 0.41 times more return on investment than Nexam Chemical. However, Bank of America is 2.41 times less risky than Nexam Chemical. It trades about 0.1 of its potential returns per unit of risk. Nexam Chemical Holding is currently generating about 0.04 per unit of risk. If you would invest 3,009 in Bank of America on August 26, 2024 and sell it today you would earn a total of 1,691 from holding Bank of America or generate 56.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Bank of America vs. Nexam Chemical Holding
Performance |
| Timeline |
| Bank of America |
| Nexam Chemical Holding |
Bank of America and Nexam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Nexam Chemical
The main advantage of trading using opposite Bank of America and Nexam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Nexam Chemical 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 Nexam Chemical will offset losses from the drop in Nexam Chemical's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Nexam Chemical vs. Svenska Aerogel Holding | Nexam Chemical vs. Kancera AB | Nexam Chemical vs. BIMobject AB | Nexam Chemical vs. KABE Group AB |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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