Correlation Between GP Investments and Bank of America
Can any of the company-specific risk be diversified away by investing in both GP Investments 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 GP Investments 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 GP Investments and Bank of America, you can compare the effects of market volatilities on GP Investments 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 GP Investments with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of GP Investments and Bank of America.
Diversification Opportunities for GP Investments and Bank of America
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GPIV33 and Bank is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding GP Investments 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 GP Investments 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 GP Investments 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 GP Investments i.e., GP Investments and Bank of America go up and down completely randomly.
Pair Corralation between GP Investments and Bank of America
Assuming the 90 days trading horizon GP Investments is expected to generate 3.61 times less return on investment than Bank of America. In addition to that, GP Investments is 1.53 times more volatile than Bank of America. It trades about 0.07 of its total potential returns per unit of risk. Bank of America is currently generating about 0.37 per unit of volatility. If you would invest 6,136 in Bank of America on August 30, 2024 and sell it today you would earn a total of 996.00 from holding Bank of America or generate 16.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GP Investments vs. Bank of America
Performance |
| Timeline |
| GP Investments |
| Bank of America |
GP Investments and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GP Investments and Bank of America
The main advantage of trading using opposite GP Investments and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GP Investments 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.| GP Investments vs. Global X Funds | GP Investments vs. American Airlines Group | GP Investments vs. Southwest Airlines Co | GP Investments vs. Unity Software |
| Bank of America vs. GP Investments | Bank of America vs. Metalurgica Gerdau SA | Bank of America vs. Spotify Technology SA | Bank of America vs. Warner Music Group |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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