Correlation Between Bank of America and Novozymes
Can any of the company-specific risk be diversified away by investing in both Bank of America and Novozymes 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 Novozymes 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 Novozymes AS, you can compare the effects of market volatilities on Bank of America and Novozymes 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 Novozymes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Novozymes.
Diversification Opportunities for Bank of America and Novozymes
-0.93 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Novozymes is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Novozymes AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novozymes AS 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 Novozymes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novozymes AS has no effect on the direction of Bank of America i.e., Bank of America and Novozymes go up and down completely randomly.
Pair Corralation between Bank of America and Novozymes
Considering the 90-day investment horizon Bank of America is expected to generate 1.01 times more return on investment than Novozymes. However, Bank of America is 1.01 times more volatile than Novozymes AS. It trades about 0.26 of its potential returns per unit of risk. Novozymes AS is currently generating about -0.19 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 488.00 from holding Bank of America or generate 11.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Novozymes AS
Performance |
| Timeline |
| Bank of America |
| Novozymes AS |
Bank of America and Novozymes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Novozymes
The main advantage of trading using opposite Bank of America and Novozymes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Novozymes 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 Novozymes will offset losses from the drop in Novozymes' 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 |
| Novozymes vs. Air Liquide SA | Novozymes vs. PPG Industries | Novozymes vs. Sherwin Williams Co | Novozymes vs. Air Products and |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |