Correlation Between Bank of America and Nextgen Food
Can any of the company-specific risk be diversified away by investing in both Bank of America and Nextgen Food 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 Nextgen Food 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 Nextgen Food Robotics, you can compare the effects of market volatilities on Bank of America and Nextgen Food 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 Nextgen Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Nextgen Food.
Diversification Opportunities for Bank of America and Nextgen Food
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Nextgen is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Nextgen Food Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextgen Food Robotics 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 Nextgen Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextgen Food Robotics has no effect on the direction of Bank of America i.e., Bank of America and Nextgen Food go up and down completely randomly.
Pair Corralation between Bank of America and Nextgen Food
Considering the 90-day investment horizon Bank of America is expected to under-perform the Nextgen Food. But the stock apears to be less risky and, when comparing its historical volatility, Bank of America is 15.31 times less risky than Nextgen Food. The stock trades about -0.01 of its potential returns per unit of risk. The Nextgen Food Robotics is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4.50 in Nextgen Food Robotics on September 12, 2024 and sell it today you would earn a total of 0.50 from holding Nextgen Food Robotics or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Nextgen Food Robotics
Performance |
| Timeline |
| Bank of America |
| Nextgen Food Robotics |
Bank of America and Nextgen Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Nextgen Food
The main advantage of trading using opposite Bank of America and Nextgen Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Nextgen Food 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 Nextgen Food will offset losses from the drop in Nextgen Food's long position.| Bank of America vs. JPMorgan Chase Co | Bank of America vs. Victory Integrity Smallmid Cap | Bank of America vs. Hilton Worldwide Holdings | Bank of America vs. NVIDIA |
| Nextgen Food vs. Legacy Education | Nextgen Food vs. Apple Inc | Nextgen Food vs. NVIDIA | Nextgen Food vs. Microsoft |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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