Correlation Between Bank of America and Ouro Fino
Can any of the company-specific risk be diversified away by investing in both Bank of America and Ouro Fino 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 Ouro Fino 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 Ouro Fino Sade, you can compare the effects of market volatilities on Bank of America and Ouro Fino 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 Ouro Fino. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Ouro Fino.
Diversification Opportunities for Bank of America and Ouro Fino
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bank and Ouro is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Ouro Fino Sade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ouro Fino Sade 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 Ouro Fino. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ouro Fino Sade has no effect on the direction of Bank of America i.e., Bank of America and Ouro Fino go up and down completely randomly.
Pair Corralation between Bank of America and Ouro Fino
Considering the 90-day investment horizon Bank of America is expected to generate 1.29 times more return on investment than Ouro Fino. However, Bank of America is 1.29 times more volatile than Ouro Fino Sade. It trades about 0.31 of its potential returns per unit of risk. Ouro Fino Sade is currently generating about -0.21 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 Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Ouro Fino Sade
Performance |
| Timeline |
| Bank of America |
| Ouro Fino Sade |
Bank of America and Ouro Fino Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Ouro Fino
The main advantage of trading using opposite Bank of America and Ouro Fino positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Ouro Fino 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 Ouro Fino will offset losses from the drop in Ouro Fino'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 |
| Ouro Fino vs. Align Technology | Ouro Fino vs. Unifique Telecomunicaes SA | Ouro Fino vs. Telecomunicaes Brasileiras SA | Ouro Fino vs. Livetech da Bahia |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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