Correlation Between Bank of America and Stellar AfricaGold
Can any of the company-specific risk be diversified away by investing in both Bank of America and Stellar AfricaGold 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 Stellar AfricaGold 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 Stellar AfricaGold, you can compare the effects of market volatilities on Bank of America and Stellar AfricaGold 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 Stellar AfricaGold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Stellar AfricaGold.
Diversification Opportunities for Bank of America and Stellar AfricaGold
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Stellar is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Stellar AfricaGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stellar AfricaGold 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 Stellar AfricaGold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stellar AfricaGold has no effect on the direction of Bank of America i.e., Bank of America and Stellar AfricaGold go up and down completely randomly.
Pair Corralation between Bank of America and Stellar AfricaGold
Considering the 90-day investment horizon Bank of America is expected to under-perform the Stellar AfricaGold. But the stock apears to be less risky and, when comparing its historical volatility, Bank of America is 13.77 times less risky than Stellar AfricaGold. The stock trades about -0.36 of its potential returns per unit of risk. The Stellar AfricaGold is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 7.00 in Stellar AfricaGold on November 28, 2024 and sell it today you would earn a total of 5.00 from holding Stellar AfricaGold or generate 71.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Stellar AfricaGold
Performance |
| Timeline |
| Bank of America |
| Stellar AfricaGold |
Bank of America and Stellar AfricaGold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Stellar AfricaGold
The main advantage of trading using opposite Bank of America and Stellar AfricaGold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Stellar AfricaGold 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 Stellar AfricaGold will offset losses from the drop in Stellar AfricaGold'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 |
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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 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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