Correlation Between Bank of America and Nouveau Monde
Can any of the company-specific risk be diversified away by investing in both Bank of America and Nouveau Monde 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 Nouveau Monde 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 Nouveau Monde Graphite, you can compare the effects of market volatilities on Bank of America and Nouveau Monde 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 Nouveau Monde. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Nouveau Monde.
Diversification Opportunities for Bank of America and Nouveau Monde
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Nouveau is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Nouveau Monde Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nouveau Monde Graphite 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 Nouveau Monde. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nouveau Monde Graphite has no effect on the direction of Bank of America i.e., Bank of America and Nouveau Monde go up and down completely randomly.
Pair Corralation between Bank of America and Nouveau Monde
Assuming the 90 days trading horizon Bank of America is expected to generate 1.08 times more return on investment than Nouveau Monde. However, Bank of America is 1.08 times more volatile than Nouveau Monde Graphite. It trades about 0.26 of its potential returns per unit of risk. Nouveau Monde Graphite is currently generating about -0.24 per unit of risk. If you would invest 2,216 in Bank of America on August 30, 2024 and sell it today you would earn a total of 272.00 from holding Bank of America or generate 12.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Nouveau Monde Graphite
Performance |
| Timeline |
| Bank of America |
| Nouveau Monde Graphite |
Bank of America and Nouveau Monde Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Nouveau Monde
The main advantage of trading using opposite Bank of America and Nouveau Monde positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Nouveau Monde 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 Nouveau Monde will offset losses from the drop in Nouveau Monde's long position.| Bank of America vs. Apple Inc CDR | Bank of America vs. Berkshire Hathaway CDR | Bank of America vs. Microsoft Corp CDR | Bank of America vs. Alphabet Inc CDR |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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