Correlation Between Bank of America and Silver Bull
Can any of the company-specific risk be diversified away by investing in both Bank of America and Silver Bull 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 Silver Bull 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 Silver Bull Resources, you can compare the effects of market volatilities on Bank of America and Silver Bull 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 Silver Bull. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Silver Bull.
Diversification Opportunities for Bank of America and Silver Bull
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Silver is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Silver Bull Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Bull Resources 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 Silver Bull. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Bull Resources has no effect on the direction of Bank of America i.e., Bank of America and Silver Bull go up and down completely randomly.
Pair Corralation between Bank of America and Silver Bull
Assuming the 90 days trading horizon Bank of America is expected to generate 0.82 times more return on investment than Silver Bull. However, Bank of America is 1.22 times less risky than Silver Bull. It trades about 0.31 of its potential returns per unit of risk. Silver Bull Resources is currently generating about 0.01 per unit of risk. If you would invest 2,181 in Bank of America on September 2, 2024 and sell it today you would earn a total of 307.00 from holding Bank of America or generate 14.08% 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. Silver Bull Resources
Performance |
| Timeline |
| Bank of America |
| Silver Bull Resources |
Bank of America and Silver Bull Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Silver Bull
The main advantage of trading using opposite Bank of America and Silver Bull positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Silver Bull 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 Silver Bull will offset losses from the drop in Silver Bull'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 |
| Silver Bull vs. Silver Predator Corp | Silver Bull vs. Silver Range Resources | Silver Bull vs. Stakeholder Gold Corp | Silver Bull vs. Loncor Resources |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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