Correlation Between Bank of America and Western Uranium
Can any of the company-specific risk be diversified away by investing in both Bank of America and Western Uranium 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 Uranium 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 Uranium Vanadium, you can compare the effects of market volatilities on Bank of America and Western Uranium 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 Uranium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Western Uranium.
Diversification Opportunities for Bank of America and Western Uranium
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Western is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Western Uranium Vanadium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Uranium Vanadium 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 Uranium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Uranium Vanadium has no effect on the direction of Bank of America i.e., Bank of America and Western Uranium go up and down completely randomly.
Pair Corralation between Bank of America and Western Uranium
Considering the 90-day investment horizon Bank of America is expected to generate 0.55 times more return on investment than Western Uranium. However, Bank of America is 1.82 times less risky than Western Uranium. It trades about 0.31 of its potential returns per unit of risk. Western Uranium Vanadium is currently generating about -0.38 per unit of risk. If you would invest 4,182 in Bank of America on September 1, 2024 and sell it today you would earn a total of 569.00 from holding Bank of America or generate 13.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of America vs. Western Uranium Vanadium
Performance |
| Timeline |
| Bank of America |
| Western Uranium Vanadium |
Bank of America and Western Uranium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Western Uranium
The main advantage of trading using opposite Bank of America and Western Uranium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Western Uranium 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 Uranium will offset losses from the drop in Western Uranium'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 |
| Western Uranium vs. Isoenergy | Western Uranium vs. Paladin Energy | Western Uranium vs. F3 Uranium Corp | Western Uranium vs. enCore Energy Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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