Correlation Between Bank of America and Tombstone Exploration
Can any of the company-specific risk be diversified away by investing in both Bank of America and Tombstone Exploration 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 Tombstone Exploration 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 Tombstone Exploration Corp, you can compare the effects of market volatilities on Bank of America and Tombstone Exploration 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 Tombstone Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Tombstone Exploration.
Diversification Opportunities for Bank of America and Tombstone Exploration
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Tombstone is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Tombstone Exploration Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tombstone Exploration 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 Tombstone Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tombstone Exploration has no effect on the direction of Bank of America i.e., Bank of America and Tombstone Exploration go up and down completely randomly.
Pair Corralation between Bank of America and Tombstone Exploration
Considering the 90-day investment horizon Bank of America is expected to generate 151.28 times less return on investment than Tombstone Exploration. But when comparing it to its historical volatility, Bank of America is 109.23 times less risky than Tombstone Exploration. It trades about 0.1 of its potential returns per unit of risk. Tombstone Exploration Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 0.01 in Tombstone Exploration Corp on September 14, 2024 and sell it today you would earn a total of 0.00 from holding Tombstone Exploration Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Tombstone Exploration Corp
Performance |
| Timeline |
| Bank of America |
| Tombstone Exploration |
Bank of America and Tombstone Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Tombstone Exploration
The main advantage of trading using opposite Bank of America and Tombstone Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Tombstone Exploration 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 Tombstone Exploration will offset losses from the drop in Tombstone Exploration'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 |
| Tombstone Exploration vs. Summa Silver Corp | Tombstone Exploration vs. GoGold Resources | Tombstone Exploration vs. Scottie Resources Corp | Tombstone Exploration vs. Brixton Metals |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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