Correlation Between Bank of America and Outcrop Gold
Can any of the company-specific risk be diversified away by investing in both Bank of America and Outcrop Gold 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 Outcrop Gold 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 Outcrop Gold Corp, you can compare the effects of market volatilities on Bank of America and Outcrop Gold 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 Outcrop Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Outcrop Gold.
Diversification Opportunities for Bank of America and Outcrop Gold
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and Outcrop is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Outcrop Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outcrop Gold Corp 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 Outcrop Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outcrop Gold Corp has no effect on the direction of Bank of America i.e., Bank of America and Outcrop Gold go up and down completely randomly.
Pair Corralation between Bank of America and Outcrop Gold
Considering the 90-day investment horizon Bank of America is expected to generate 0.44 times more return on investment than Outcrop Gold. However, Bank of America is 2.25 times less risky than Outcrop Gold. It trades about 0.31 of its potential returns per unit of risk. Outcrop Gold Corp is currently generating about -0.18 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 Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of America vs. Outcrop Gold Corp
Performance |
| Timeline |
| Bank of America |
| Outcrop Gold Corp |
Bank of America and Outcrop Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Outcrop Gold
The main advantage of trading using opposite Bank of America and Outcrop Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Outcrop Gold 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 Outcrop Gold will offset losses from the drop in Outcrop Gold's long position.| Bank of America vs. Citigroup | Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC |
| Outcrop Gold vs. Strikepoint Gold | Outcrop Gold vs. Kootenay Silver | Outcrop Gold vs. Kore Mining | Outcrop Gold vs. Blackrock Silver Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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