Correlation Between Bank of America and Pluristem
Can any of the company-specific risk be diversified away by investing in both Bank of America and Pluristem 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 Pluristem 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 Pluristem, you can compare the effects of market volatilities on Bank of America and Pluristem 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 Pluristem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Pluristem.
Diversification Opportunities for Bank of America and Pluristem
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Pluristem is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Pluristem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pluristem 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 Pluristem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pluristem has no effect on the direction of Bank of America i.e., Bank of America and Pluristem go up and down completely randomly.
Pair Corralation between Bank of America and Pluristem
Considering the 90-day investment horizon Bank of America is expected to generate 20.18 times less return on investment than Pluristem. But when comparing it to its historical volatility, Bank of America is 34.95 times less risky than Pluristem. It trades about 0.13 of its potential returns per unit of risk. Pluristem is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 21,390 in Pluristem on September 2, 2024 and sell it today you would earn a total of 179,610 from holding Pluristem or generate 839.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.21% |
| Values | Daily Returns |
Bank of America vs. Pluristem
Performance |
| Timeline |
| Bank of America |
| Pluristem |
Bank of America and Pluristem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Pluristem
The main advantage of trading using opposite Bank of America and Pluristem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Pluristem 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 Pluristem will offset losses from the drop in Pluristem'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 |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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