Correlation Between Bank of America and New Age
Can any of the company-specific risk be diversified away by investing in both Bank of America and New Age 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 New Age 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 New Age Metals, you can compare the effects of market volatilities on Bank of America and New Age 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 New Age. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and New Age.
Diversification Opportunities for Bank of America and New Age
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and New is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and New Age Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Age Metals 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 New Age. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Age Metals has no effect on the direction of Bank of America i.e., Bank of America and New Age go up and down completely randomly.
Pair Corralation between Bank of America and New Age
Considering the 90-day investment horizon Bank of America is expected to generate 0.15 times more return on investment than New Age. However, Bank of America is 6.69 times less risky than New Age. It trades about -0.03 of its potential returns per unit of risk. New Age Metals is currently generating about -0.05 per unit of risk. If you would invest 4,724 in Bank of America on October 26, 2024 and sell it today you would lose (85.00) from holding Bank of America or give up 1.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.5% |
| Values | Daily Returns |
Bank of America vs. New Age Metals
Performance |
| Timeline |
| Bank of America |
| New Age Metals |
Bank of America and New Age Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and New Age
The main advantage of trading using opposite Bank of America and New Age positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, New Age 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 New Age will offset losses from the drop in New Age's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC |
| New Age vs. Vision Lithium | New Age vs. Group Ten Metals | New Age vs. Generation Mining Limited | New Age vs. Nickel Creek Platinum |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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