Correlation Between Globex Mining and Bank of America
Can any of the company-specific risk be diversified away by investing in both Globex Mining 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 Globex Mining 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 Globex Mining Enterprises and Bank of America, you can compare the effects of market volatilities on Globex Mining 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 Globex Mining with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globex Mining and Bank of America.
Diversification Opportunities for Globex Mining and Bank of America
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Globex and Bank is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Globex Mining Enterprises 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 Globex Mining 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 Globex Mining Enterprises 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 Globex Mining i.e., Globex Mining and Bank of America go up and down completely randomly.
Pair Corralation between Globex Mining and Bank of America
Assuming the 90 days trading horizon Globex Mining Enterprises is expected to generate 3.02 times more return on investment than Bank of America. However, Globex Mining is 3.02 times more volatile than Bank of America. It trades about 0.15 of its potential returns per unit of risk. Bank of America is currently generating about -0.16 per unit of risk. If you would invest 106.00 in Globex Mining Enterprises on September 19, 2024 and sell it today you would earn a total of 9.00 from holding Globex Mining Enterprises or generate 8.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globex Mining Enterprises vs. Bank of America
Performance |
| Timeline |
| Globex Mining Enterprises |
| Bank of America |
Globex Mining and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globex Mining and Bank of America
The main advantage of trading using opposite Globex Mining and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globex Mining 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.| Globex Mining vs. Foraco International SA | Globex Mining vs. Geodrill Limited | Globex Mining vs. Major Drilling Group | Globex Mining vs. Bri Chem Corp |
| Bank of America vs. Metalero Mining Corp | Bank of America vs. Information Services | Bank of America vs. Globex Mining Enterprises | Bank of America vs. Data Communications Management |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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