Correlation Between Bank of America and Orogen Royalties
Can any of the company-specific risk be diversified away by investing in both Bank of America and Orogen Royalties 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 Orogen Royalties 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 Orogen Royalties, you can compare the effects of market volatilities on Bank of America and Orogen Royalties 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 Orogen Royalties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Orogen Royalties.
Diversification Opportunities for Bank of America and Orogen Royalties
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Orogen is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Orogen Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orogen Royalties 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 Orogen Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orogen Royalties has no effect on the direction of Bank of America i.e., Bank of America and Orogen Royalties go up and down completely randomly.
Pair Corralation between Bank of America and Orogen Royalties
Assuming the 90 days trading horizon Bank of America is expected to generate 0.51 times more return on investment than Orogen Royalties. However, Bank of America is 1.95 times less risky than Orogen Royalties. It trades about 0.1 of its potential returns per unit of risk. Orogen Royalties is currently generating about 0.04 per unit of risk. If you would invest 2,066 in Bank of America on September 1, 2024 and sell it today you would earn a total of 422.00 from holding Bank of America or generate 20.43% 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. Orogen Royalties
Performance |
| Timeline |
| Bank of America |
| Orogen Royalties |
Bank of America and Orogen Royalties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Orogen Royalties
The main advantage of trading using opposite Bank of America and Orogen Royalties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Orogen Royalties 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 Orogen Royalties will offset losses from the drop in Orogen Royalties' long position.| Bank of America vs. Brookfield Investments | Bank of America vs. Partners Value Investments | Bank of America vs. Labrador Iron Ore | Bank of America vs. Millennium Silver Corp |
| Orogen Royalties vs. First Majestic Silver | Orogen Royalties vs. Ivanhoe Energy | Orogen Royalties vs. Orezone Gold Corp | Orogen Royalties vs. Faraday Copper Corp |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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