Correlation Between Bank of America and Onward Medical
Can any of the company-specific risk be diversified away by investing in both Bank of America and Onward Medical 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 Onward Medical 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 Onward Medical NV, you can compare the effects of market volatilities on Bank of America and Onward Medical 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 Onward Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Onward Medical.
Diversification Opportunities for Bank of America and Onward Medical
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bank and Onward is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Onward Medical NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onward Medical NV 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 Onward Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onward Medical NV has no effect on the direction of Bank of America i.e., Bank of America and Onward Medical go up and down completely randomly.
Pair Corralation between Bank of America and Onward Medical
Considering the 90-day investment horizon Bank of America is expected to generate 1.34 times less return on investment than Onward Medical. But when comparing it to its historical volatility, Bank of America is 3.85 times less risky than Onward Medical. It trades about 0.16 of its potential returns per unit of risk. Onward Medical NV is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 296.00 in Onward Medical NV on August 25, 2024 and sell it today you would earn a total of 179.00 from holding Onward Medical NV or generate 60.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.55% |
| Values | Daily Returns |
Bank of America vs. Onward Medical NV
Performance |
| Timeline |
| Bank of America |
| Onward Medical NV |
Bank of America and Onward Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Onward Medical
The main advantage of trading using opposite Bank of America and Onward Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Onward Medical 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 Onward Medical will offset losses from the drop in Onward Medical's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Onward Medical vs. Hyloris Developmentsen Sa | Onward Medical vs. Biocartis Group NV | Onward Medical vs. Oxurion NV | Onward Medical vs. Unifiedpost Group SA |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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