Correlation Between Bank of America and US GoldMining
Can any of the company-specific risk be diversified away by investing in both Bank of America and US GoldMining 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 US GoldMining 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 US GoldMining Warrant, you can compare the effects of market volatilities on Bank of America and US GoldMining 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 US GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and US GoldMining.
Diversification Opportunities for Bank of America and US GoldMining
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bank and USGOW is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and US GoldMining Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US GoldMining Warrant 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 US GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US GoldMining Warrant has no effect on the direction of Bank of America i.e., Bank of America and US GoldMining go up and down completely randomly.
Pair Corralation between Bank of America and US GoldMining
Considering the 90-day investment horizon Bank of America is expected to generate 7.95 times less return on investment than US GoldMining. But when comparing it to its historical volatility, Bank of America is 9.18 times less risky than US GoldMining. It trades about 0.08 of its potential returns per unit of risk. US GoldMining Warrant is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 104.00 in US GoldMining Warrant on November 27, 2024 and sell it today you would earn a total of 55.00 from holding US GoldMining Warrant or generate 52.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.54% |
| Values | Daily Returns |
Bank of America vs. US GoldMining Warrant
Performance |
| Timeline |
| Bank of America |
| US GoldMining Warrant |
Bank of America and US GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and US GoldMining
The main advantage of trading using opposite Bank of America and US GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, US GoldMining 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 US GoldMining will offset losses from the drop in US GoldMining'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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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