Correlation Between Bank of America and Pershing Resources
Can any of the company-specific risk be diversified away by investing in both Bank of America and Pershing Resources 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 Pershing Resources 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 Pershing Resources, you can compare the effects of market volatilities on Bank of America and Pershing Resources 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 Pershing Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Pershing Resources.
Diversification Opportunities for Bank of America and Pershing Resources
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Pershing is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Pershing Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pershing Resources 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 Pershing Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pershing Resources has no effect on the direction of Bank of America i.e., Bank of America and Pershing Resources go up and down completely randomly.
Pair Corralation between Bank of America and Pershing Resources
Considering the 90-day investment horizon Bank of America is expected to generate 9.63 times less return on investment than Pershing Resources. But when comparing it to its historical volatility, Bank of America is 10.75 times less risky than Pershing Resources. It trades about 0.06 of its potential returns per unit of risk. Pershing Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3.80 in Pershing Resources on September 3, 2024 and sell it today you would lose (2.29) from holding Pershing Resources or give up 60.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Bank of America vs. Pershing Resources
Performance |
| Timeline |
| Bank of America |
| Pershing Resources |
Bank of America and Pershing Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Pershing Resources
The main advantage of trading using opposite Bank of America and Pershing Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Pershing Resources 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 Pershing Resources will offset losses from the drop in Pershing Resources' long position.| Bank of America vs. Partner Communications | Bank of America vs. Merck Company | Bank of America vs. Western Midstream Partners | Bank of America vs. Edgewise Therapeutics |
| Pershing Resources vs. Bravada Gold | Pershing Resources vs. Silver Spruce Resources | Pershing Resources vs. Monitor Ventures | Pershing Resources vs. Euro Manganese |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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