Correlation Between Bank of America and GX AI
Can any of the company-specific risk be diversified away by investing in both Bank of America and GX AI 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 GX AI 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 GX AI TECH, you can compare the effects of market volatilities on Bank of America and GX AI 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 GX AI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and GX AI.
Diversification Opportunities for Bank of America and GX AI
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and BAIQ39 is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and GX AI TECH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GX AI TECH 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 GX AI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GX AI TECH has no effect on the direction of Bank of America i.e., Bank of America and GX AI go up and down completely randomly.
Pair Corralation between Bank of America and GX AI
Assuming the 90 days trading horizon Bank of America is expected to generate 0.29 times more return on investment than GX AI. However, Bank of America is 3.48 times less risky than GX AI. It trades about 0.0 of its potential returns per unit of risk. GX AI TECH is currently generating about -0.03 per unit of risk. If you would invest 6,935 in Bank of America on October 25, 2024 and sell it today you would lose (6.00) from holding Bank of America or give up 0.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 89.47% |
| Values | Daily Returns |
Bank of America vs. GX AI TECH
Performance |
| Timeline |
| Bank of America |
| GX AI TECH |
Bank of America and GX AI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and GX AI
The main advantage of trading using opposite Bank of America and GX AI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, GX AI 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 GX AI will offset losses from the drop in GX AI's long position.| Bank of America vs. Marfrig Global Foods | Bank of America vs. ON Semiconductor | Bank of America vs. Autohome | Bank of America vs. Ryanair Holdings plc |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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