Correlation Between China Clean and Bank of America
Can any of the company-specific risk be diversified away by investing in both China Clean 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 China Clean 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 China Clean Energy and Bank of America, you can compare the effects of market volatilities on China Clean 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 China Clean with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Clean and Bank of America.
Diversification Opportunities for China Clean and Bank of America
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and Bank is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Clean Energy 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 China Clean 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 China Clean Energy 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 China Clean i.e., China Clean and Bank of America go up and down completely randomly.
Pair Corralation between China Clean and Bank of America
If you would invest 1,775 in Bank of America on August 31, 2024 and sell it today you would earn a total of 523.00 from holding Bank of America or generate 29.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
China Clean Energy vs. Bank of America
Performance |
| Timeline |
| China Clean Energy |
| Bank of America |
China Clean and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Clean and Bank of America
The main advantage of trading using opposite China Clean and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Clean 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.| China Clean vs. Sherwin Williams Co | China Clean vs. Air Liquide SA | China Clean vs. LAir Liquide SA | China Clean vs. Air Products and |
| Bank of America vs. Bank of America | Bank of America vs. Wells Fargo | Bank of America vs. Bank of America | Bank of America vs. China Construction Bank |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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