Correlation Between Bank of America and Ratio Oil
Can any of the company-specific risk be diversified away by investing in both Bank of America and Ratio Oil 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 Ratio Oil 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 Ratio Oil Explorations, you can compare the effects of market volatilities on Bank of America and Ratio Oil 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 Ratio Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Ratio Oil.
Diversification Opportunities for Bank of America and Ratio Oil
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bank and Ratio is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Ratio Oil Explorations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ratio Oil Explorations 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 Ratio Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ratio Oil Explorations has no effect on the direction of Bank of America i.e., Bank of America and Ratio Oil go up and down completely randomly.
Pair Corralation between Bank of America and Ratio Oil
Considering the 90-day investment horizon Bank of America is expected to under-perform the Ratio Oil. But the stock apears to be less risky and, when comparing its historical volatility, Bank of America is 1.6 times less risky than Ratio Oil. The stock trades about -0.37 of its potential returns per unit of risk. The Ratio Oil Explorations is currently generating about 0.5 of returns per unit of risk over similar time horizon. If you would invest 36,900 in Ratio Oil Explorations on November 27, 2024 and sell it today you would earn a total of 5,000 from holding Ratio Oil Explorations or generate 13.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 80.95% |
| Values | Daily Returns |
Bank of America vs. Ratio Oil Explorations
Performance |
| Timeline |
| Bank of America |
| Ratio Oil Explorations |
Bank of America and Ratio Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Ratio Oil
The main advantage of trading using opposite Bank of America and Ratio Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Ratio Oil 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 Ratio Oil will offset losses from the drop in Ratio Oil's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
| Ratio Oil vs. Retailors | Ratio Oil vs. Clal Insurance Enterprises | Ratio Oil vs. Suny Cellular Communication | Ratio Oil vs. Bezeq Israeli Telecommunication |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |