Correlation Between METISA Metalrgica and Bank of America
Can any of the company-specific risk be diversified away by investing in both METISA Metalrgica 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 METISA Metalrgica 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 METISA Metalrgica Timboense and Bank of America, you can compare the effects of market volatilities on METISA Metalrgica 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 METISA Metalrgica with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of METISA Metalrgica and Bank of America.
Diversification Opportunities for METISA Metalrgica and Bank of America
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between METISA and Bank is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding METISA Metalrgica Timboense 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 METISA Metalrgica 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 METISA Metalrgica Timboense 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 METISA Metalrgica i.e., METISA Metalrgica and Bank of America go up and down completely randomly.
Pair Corralation between METISA Metalrgica and Bank of America
Assuming the 90 days trading horizon METISA Metalrgica Timboense is expected to under-perform the Bank of America. In addition to that, METISA Metalrgica is 1.21 times more volatile than Bank of America. It trades about 0.0 of its total potential returns per unit of risk. Bank of America is currently generating about 0.13 per unit of volatility. If you would invest 3,363 in Bank of America on August 30, 2024 and sell it today you would earn a total of 3,769 from holding Bank of America or generate 112.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.75% |
| Values | Daily Returns |
METISA Metalrgica Timboense vs. Bank of America
Performance |
| Timeline |
| METISA Metalrgica |
| Bank of America |
METISA Metalrgica and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with METISA Metalrgica and Bank of America
The main advantage of trading using opposite METISA Metalrgica and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METISA Metalrgica 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.| METISA Metalrgica vs. Recrusul SA | METISA Metalrgica vs. Randon SA Implementos | METISA Metalrgica vs. Electro Ao Altona |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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