Correlation Between Bank of America and Ecovyst
Can any of the company-specific risk be diversified away by investing in both Bank of America and Ecovyst 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 Ecovyst 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 Ecovyst, you can compare the effects of market volatilities on Bank of America and Ecovyst 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 Ecovyst. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Ecovyst.
Diversification Opportunities for Bank of America and Ecovyst
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Ecovyst is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Ecovyst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecovyst 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 Ecovyst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecovyst has no effect on the direction of Bank of America i.e., Bank of America and Ecovyst go up and down completely randomly.
Pair Corralation between Bank of America and Ecovyst
Assuming the 90 days trading horizon Bank of America is expected to generate 11.32 times less return on investment than Ecovyst. But when comparing it to its historical volatility, Bank of America is 4.91 times less risky than Ecovyst. It trades about 0.11 of its potential returns per unit of risk. Ecovyst is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 666.00 in Ecovyst on September 1, 2024 and sell it today you would earn a total of 129.00 from holding Ecovyst or generate 19.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Ecovyst
Performance |
| Timeline |
| Bank of America |
| Ecovyst |
Bank of America and Ecovyst Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Ecovyst
The main advantage of trading using opposite Bank of America and Ecovyst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Ecovyst 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 Ecovyst will offset losses from the drop in Ecovyst's long position.| Bank of America vs. Bank of America | Bank of America vs. Bank of America | Bank of America vs. China Construction Bank | Bank of America vs. Bank of America |
| Ecovyst vs. Orion Engineered Carbons | Ecovyst vs. Cabot | Ecovyst vs. Minerals Technologies | Ecovyst vs. Quaker Chemical |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |