Correlation Between Bank of America and Americas Gold
Can any of the company-specific risk be diversified away by investing in both Bank of America and Americas Gold 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 Americas Gold 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 Americas Gold and, you can compare the effects of market volatilities on Bank of America and Americas Gold 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 Americas Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Americas Gold.
Diversification Opportunities for Bank of America and Americas Gold
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Americas is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Americas Gold and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americas Gold 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 Americas Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americas Gold has no effect on the direction of Bank of America i.e., Bank of America and Americas Gold go up and down completely randomly.
Pair Corralation between Bank of America and Americas Gold
Considering the 90-day investment horizon Bank of America is expected to under-perform the Americas Gold. But the stock apears to be less risky and, when comparing its historical volatility, Bank of America is 4.15 times less risky than Americas Gold. The stock trades about -0.03 of its potential returns per unit of risk. The Americas Gold and is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 34.00 in Americas Gold and on October 26, 2024 and sell it today you would earn a total of 13.00 from holding Americas Gold and or generate 38.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Americas Gold and
Performance |
| Timeline |
| Bank of America |
| Americas Gold |
Bank of America and Americas Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Americas Gold
The main advantage of trading using opposite Bank of America and Americas Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Americas Gold 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 Americas Gold will offset losses from the drop in Americas Gold's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC |
| Americas Gold vs. Daito Trust Construction | Americas Gold vs. FARM 51 GROUP | Americas Gold vs. Major Drilling Group | Americas Gold vs. WIMFARM SA EO |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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