Correlation Between Bank of America and NewMed Energy
Can any of the company-specific risk be diversified away by investing in both Bank of America and NewMed Energy 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 NewMed Energy 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 NewMed Energy , you can compare the effects of market volatilities on Bank of America and NewMed Energy 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 NewMed Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and NewMed Energy.
Diversification Opportunities for Bank of America and NewMed Energy
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and NewMed is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and NewMed Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewMed Energy 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 NewMed Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewMed Energy has no effect on the direction of Bank of America i.e., Bank of America and NewMed Energy go up and down completely randomly.
Pair Corralation between Bank of America and NewMed Energy
Considering the 90-day investment horizon Bank of America is expected to generate 1.34 times more return on investment than NewMed Energy. However, Bank of America is 1.34 times more volatile than NewMed Energy . It trades about 0.31 of its potential returns per unit of risk. NewMed Energy is currently generating about 0.04 per unit of risk. If you would invest 4,182 in Bank of America on September 1, 2024 and sell it today you would earn a total of 569.00 from holding Bank of America or generate 13.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 85.71% |
| Values | Daily Returns |
Bank of America vs. NewMed Energy
Performance |
| Timeline |
| Bank of America |
| NewMed Energy |
Bank of America and NewMed Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and NewMed Energy
The main advantage of trading using opposite Bank of America and NewMed Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, NewMed Energy 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 NewMed Energy will offset losses from the drop in NewMed Energy's long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| NewMed Energy vs. Electreon Wireless | NewMed Energy vs. Azorim Investment Development | NewMed Energy vs. More Mutual Funds | NewMed Energy vs. Ram On Investments 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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