Correlation Between Bank of America and Arbor Metals
Can any of the company-specific risk be diversified away by investing in both Bank of America and Arbor Metals 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 Arbor Metals 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 Arbor Metals Corp, you can compare the effects of market volatilities on Bank of America and Arbor Metals 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 Arbor Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Arbor Metals.
Diversification Opportunities for Bank of America and Arbor Metals
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Arbor is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Arbor Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbor Metals 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 Arbor Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbor Metals Corp has no effect on the direction of Bank of America i.e., Bank of America and Arbor Metals go up and down completely randomly.
Pair Corralation between Bank of America and Arbor Metals
Assuming the 90 days trading horizon Bank of America is expected to generate 0.92 times more return on investment than Arbor Metals. However, Bank of America is 1.09 times less risky than Arbor Metals. It trades about 0.29 of its potential returns per unit of risk. Arbor Metals Corp is currently generating about -0.27 per unit of risk. If you would invest 2,207 in Bank of America on August 31, 2024 and sell it today you would earn a total of 293.00 from holding Bank of America or generate 13.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Arbor Metals Corp
Performance |
| Timeline |
| Bank of America |
| Arbor Metals Corp |
Bank of America and Arbor Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Arbor Metals
The main advantage of trading using opposite Bank of America and Arbor Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Arbor Metals 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 Arbor Metals will offset losses from the drop in Arbor Metals' long position.| Bank of America vs. Highwood Asset Management | Bank of America vs. Precision Drilling | Bank of America vs. Metalero Mining Corp | Bank of America vs. Brookfield Office Properties |
| Arbor Metals vs. Solar Alliance Energy | Arbor Metals vs. Global X Active | Arbor Metals vs. Financial 15 Split | Arbor Metals vs. Rubicon Organics |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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