Correlation Between Bank of America and Razor Energy
Can any of the company-specific risk be diversified away by investing in both Bank of America and Razor Energy 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 Razor Energy 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 Razor Energy Corp, you can compare the effects of market volatilities on Bank of America and Razor Energy 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 Razor Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Razor Energy.
Diversification Opportunities for Bank of America and Razor Energy
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Razor is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Razor Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Razor Energy Corp 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 Razor Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Razor Energy Corp has no effect on the direction of Bank of America i.e., Bank of America and Razor Energy go up and down completely randomly.
Pair Corralation between Bank of America and Razor Energy
Considering the 90-day investment horizon Bank of America is expected to generate 16.91 times less return on investment than Razor Energy. But when comparing it to its historical volatility, Bank of America is 36.21 times less risky than Razor Energy. It trades about 0.1 of its potential returns per unit of risk. Razor Energy Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 55.00 in Razor Energy Corp on August 31, 2024 and sell it today you would lose (54.99) from holding Razor Energy Corp or give up 99.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Bank of America vs. Razor Energy Corp
Performance |
| Timeline |
| Bank of America |
| Razor Energy Corp |
Bank of America and Razor Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Razor Energy
The main advantage of trading using opposite Bank of America and Razor Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Razor Energy 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 Razor Energy will offset losses from the drop in Razor Energy's long position.| Bank of America vs. RLJ Lodging Trust | Bank of America vs. Aquagold International | Bank of America vs. Stepstone Group | Bank of America vs. Morningstar Unconstrained Allocation |
| Razor Energy vs. Permian Resources | Razor Energy vs. Devon Energy | Razor Energy vs. EOG Resources | Razor Energy vs. Coterra Energy |
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 CEOs Directory module to screen CEOs from public companies around the world.
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