Correlation Between Bank of America and Renewal Fuels
Can any of the company-specific risk be diversified away by investing in both Bank of America and Renewal Fuels 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 Renewal Fuels 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 Renewal Fuels, you can compare the effects of market volatilities on Bank of America and Renewal Fuels 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 Renewal Fuels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Renewal Fuels.
Diversification Opportunities for Bank of America and Renewal Fuels
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bank and Renewal is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Renewal Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renewal Fuels 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 Renewal Fuels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renewal Fuels has no effect on the direction of Bank of America i.e., Bank of America and Renewal Fuels go up and down completely randomly.
Pair Corralation between Bank of America and Renewal Fuels
Considering the 90-day investment horizon Bank of America is expected to under-perform the Renewal Fuels. But the stock apears to be less risky and, when comparing its historical volatility, Bank of America is 240.17 times less risky than Renewal Fuels. The stock trades about -0.29 of its potential returns per unit of risk. The Renewal Fuels is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Renewal Fuels on November 29, 2024 and sell it today you would earn a total of 0.01 from holding Renewal Fuels or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of America vs. Renewal Fuels
Performance |
| Timeline |
| Bank of America |
| Renewal Fuels |
Bank of America and Renewal Fuels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Renewal Fuels
The main advantage of trading using opposite Bank of America and Renewal Fuels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Renewal Fuels 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 Renewal Fuels will offset losses from the drop in Renewal Fuels' 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 |
| Renewal Fuels vs. C Bond Systems | Renewal Fuels vs. Lhyfe SA | Renewal Fuels vs. Industrial Nanotech | Renewal Fuels vs. CN Energy Group |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |