Correlation Between Bank of America and Western Alaska
Can any of the company-specific risk be diversified away by investing in both Bank of America and Western Alaska 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 Western Alaska 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 Western Alaska Minerals, you can compare the effects of market volatilities on Bank of America and Western Alaska 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 Western Alaska. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Western Alaska.
Diversification Opportunities for Bank of America and Western Alaska
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Western is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Western Alaska Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Alaska Minerals 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 Western Alaska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Alaska Minerals has no effect on the direction of Bank of America i.e., Bank of America and Western Alaska go up and down completely randomly.
Pair Corralation between Bank of America and Western Alaska
Considering the 90-day investment horizon Bank of America is expected to generate 2.91 times less return on investment than Western Alaska. But when comparing it to its historical volatility, Bank of America is 4.7 times less risky than Western Alaska. It trades about 0.18 of its potential returns per unit of risk. Western Alaska Minerals is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 36.00 in Western Alaska Minerals on November 3, 2024 and sell it today you would earn a total of 4.00 from holding Western Alaska Minerals or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of America vs. Western Alaska Minerals
Performance |
| Timeline |
| Bank of America |
| Western Alaska Minerals |
Bank of America and Western Alaska Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Western Alaska
The main advantage of trading using opposite Bank of America and Western Alaska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Western Alaska 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 Western Alaska will offset losses from the drop in Western Alaska'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 |
| Western Alaska vs. First Tellurium Corp | Western Alaska vs. Max Resource Corp | Western Alaska vs. P2 Gold | Western Alaska vs. CMC 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 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.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |