Correlation Between Big Rock and Bank of America
Can any of the company-specific risk be diversified away by investing in both Big Rock and Bank of America 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 Big Rock and Bank of America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Rock Brewery and Bank of America, you can compare the effects of market volatilities on Big Rock and Bank of America 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 Big Rock with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Rock and Bank of America.
Diversification Opportunities for Big Rock and Bank of America
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Big and Bank is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Big Rock Brewery and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of America and Big Rock 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 Big Rock Brewery are associated (or correlated) with Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of America has no effect on the direction of Big Rock i.e., Big Rock and Bank of America go up and down completely randomly.
Pair Corralation between Big Rock and Bank of America
Assuming the 90 days horizon Big Rock is expected to generate 1.49 times less return on investment than Bank of America. In addition to that, Big Rock is 3.47 times more volatile than Bank of America. It trades about 0.01 of its total potential returns per unit of risk. Bank of America is currently generating about 0.07 per unit of volatility. If you would invest 2,050 in Bank of America on October 17, 2024 and sell it today you would earn a total of 333.00 from holding Bank of America or generate 16.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.31% |
| Values | Daily Returns |
Big Rock Brewery vs. Bank of America
Performance |
| Timeline |
| Big Rock Brewery |
| Bank of America |
Big Rock and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Rock and Bank of America
The main advantage of trading using opposite Big Rock and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Rock position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.| Big Rock vs. Corby Spirit and | Big Rock vs. Gamehost | Big Rock vs. Andrew Peller Limited | Big Rock vs. Buhler Industries |
| Bank of America vs. Oncolytics Biotech | Bank of America vs. Big Rock Brewery | Bank of America vs. InPlay Oil Corp | Bank of America vs. Rogers Communications |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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