Correlation Between Bank of America and NORTHROP
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By analyzing existing cross correlation between Bank of America and NORTHROP GRUMMAN P, you can compare the effects of market volatilities on Bank of America and NORTHROP 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 NORTHROP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and NORTHROP.
Diversification Opportunities for Bank of America and NORTHROP
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and NORTHROP is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and NORTHROP GRUMMAN P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHROP GRUMMAN P 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 NORTHROP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORTHROP GRUMMAN P has no effect on the direction of Bank of America i.e., Bank of America and NORTHROP go up and down completely randomly.
Pair Corralation between Bank of America and NORTHROP
Considering the 90-day investment horizon Bank of America is expected to generate 1.33 times more return on investment than NORTHROP. However, Bank of America is 1.33 times more volatile than NORTHROP GRUMMAN P. It trades about 0.13 of its potential returns per unit of risk. NORTHROP GRUMMAN P is currently generating about 0.0 per unit of risk. If you would invest 3,007 in Bank of America on September 2, 2024 and sell it today you would earn a total of 1,744 from holding Bank of America or generate 58.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 68.55% |
| Values | Daily Returns |
Bank of America vs. NORTHROP GRUMMAN P
Performance |
| Timeline |
| Bank of America |
| NORTHROP GRUMMAN P |
Bank of America and NORTHROP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and NORTHROP
The main advantage of trading using opposite Bank of America and NORTHROP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, NORTHROP 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 NORTHROP will offset losses from the drop in NORTHROP's long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| NORTHROP vs. AEP TEX INC | NORTHROP vs. US BANK NATIONAL | NORTHROP vs. Bank of America | NORTHROP vs. GE Aerospace |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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