Correlation Between Bank of America and Vystar Corp
Can any of the company-specific risk be diversified away by investing in both Bank of America and Vystar Corp 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 Vystar Corp 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 Vystar Corp, you can compare the effects of market volatilities on Bank of America and Vystar Corp 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 Vystar Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Vystar Corp.
Diversification Opportunities for Bank of America and Vystar Corp
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Vystar is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Vystar Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vystar Corp 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 Vystar Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vystar Corp has no effect on the direction of Bank of America i.e., Bank of America and Vystar Corp go up and down completely randomly.
Pair Corralation between Bank of America and Vystar Corp
Considering the 90-day investment horizon Bank of America is expected to generate 18.91 times less return on investment than Vystar Corp. But when comparing it to its historical volatility, Bank of America is 31.89 times less risky than Vystar Corp. It trades about 0.31 of its potential returns per unit of risk. Vystar Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3.50 in Vystar Corp on September 1, 2024 and sell it today you would lose (1.10) from holding Vystar Corp or give up 31.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Vystar Corp
Performance |
| Timeline |
| Bank of America |
| Vystar Corp |
Bank of America and Vystar Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Vystar Corp
The main advantage of trading using opposite Bank of America and Vystar Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Vystar Corp 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 Vystar Corp will offset losses from the drop in Vystar Corp'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 |
| Vystar Corp vs. Sherwin Williams Co | Vystar Corp vs. Air Liquide SA | Vystar Corp vs. Air Products and | Vystar Corp vs. Ecolab Inc |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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