Correlation Between Bank of America and Gfl Environmental
Can any of the company-specific risk be diversified away by investing in both Bank of America and Gfl Environmental 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 Gfl Environmental 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 Gfl Environmental Holdings, you can compare the effects of market volatilities on Bank of America and Gfl Environmental 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 Gfl Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Gfl Environmental.
Diversification Opportunities for Bank of America and Gfl Environmental
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Gfl is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Gfl Environmental Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gfl Environmental 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 Gfl Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gfl Environmental has no effect on the direction of Bank of America i.e., Bank of America and Gfl Environmental go up and down completely randomly.
Pair Corralation between Bank of America and Gfl Environmental
Assuming the 90 days trading horizon Bank of America is expected to generate 1.21 times less return on investment than Gfl Environmental. But when comparing it to its historical volatility, Bank of America is 1.16 times less risky than Gfl Environmental. It trades about 0.13 of its potential returns per unit of risk. Gfl Environmental Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,889 in Gfl Environmental Holdings on September 2, 2024 and sell it today you would earn a total of 2,752 from holding Gfl Environmental Holdings or generate 70.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Gfl Environmental Holdings
Performance |
| Timeline |
| Bank of America |
| Gfl Environmental |
Bank of America and Gfl Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Gfl Environmental
The main advantage of trading using opposite Bank of America and Gfl Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Gfl Environmental 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 Gfl Environmental will offset losses from the drop in Gfl Environmental's long position.| Bank of America vs. Birchtech Corp | Bank of America vs. US Financial 15 | Bank of America vs. Enerev5 Metals | Bank of America vs. North American Financial |
| Gfl Environmental vs. Waste Connections | Gfl Environmental vs. TFI International | Gfl Environmental vs. WSP Global | Gfl Environmental vs. Dye Durham |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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