Correlation Between Bank of America and Wheaton Precious
Can any of the company-specific risk be diversified away by investing in both Bank of America and Wheaton Precious 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 Wheaton Precious 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 Wheaton Precious Metals, you can compare the effects of market volatilities on Bank of America and Wheaton Precious 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 Wheaton Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Wheaton Precious.
Diversification Opportunities for Bank of America and Wheaton Precious
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Wheaton is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Wheaton Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wheaton Precious Metals 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 Wheaton Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wheaton Precious Metals has no effect on the direction of Bank of America i.e., Bank of America and Wheaton Precious go up and down completely randomly.
Pair Corralation between Bank of America and Wheaton Precious
Considering the 90-day investment horizon Bank of America is expected to under-perform the Wheaton Precious. But the stock apears to be less risky and, when comparing its historical volatility, Bank of America is 1.71 times less risky than Wheaton Precious. The stock trades about -0.36 of its potential returns per unit of risk. The Wheaton Precious Metals is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 5,642 in Wheaton Precious Metals on November 28, 2024 and sell it today you would earn a total of 898.00 from holding Wheaton Precious Metals or generate 15.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of America vs. Wheaton Precious Metals
Performance |
| Timeline |
| Bank of America |
| Wheaton Precious Metals |
Bank of America and Wheaton Precious Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Wheaton Precious
The main advantage of trading using opposite Bank of America and Wheaton Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Wheaton Precious 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 Wheaton Precious will offset losses from the drop in Wheaton Precious' 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 |
| Wheaton Precious vs. Aluminum of | Wheaton Precious vs. Hemisphere Energy Corp | Wheaton Precious vs. Yuexiu Transport Infrastructure | Wheaton Precious vs. Jacquet Metal Service |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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