Correlation Between Nordon Indstrias and Bank of America
Can any of the company-specific risk be diversified away by investing in both Nordon Indstrias 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 Nordon Indstrias 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 Nordon Indstrias Metalrgicas and Bank of America, you can compare the effects of market volatilities on Nordon Indstrias 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 Nordon Indstrias with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordon Indstrias and Bank of America.
Diversification Opportunities for Nordon Indstrias and Bank of America
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nordon and Bank is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Nordon Indstrias Metalrgicas 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 Nordon Indstrias 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 Nordon Indstrias Metalrgicas 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 Nordon Indstrias i.e., Nordon Indstrias and Bank of America go up and down completely randomly.
Pair Corralation between Nordon Indstrias and Bank of America
Assuming the 90 days trading horizon Nordon Indstrias Metalrgicas is expected to generate 6.04 times more return on investment than Bank of America. However, Nordon Indstrias is 6.04 times more volatile than Bank of America. It trades about 0.04 of its potential returns per unit of risk. Bank of America is currently generating about 0.07 per unit of risk. If you would invest 570.00 in Nordon Indstrias Metalrgicas on October 11, 2024 and sell it today you would earn a total of 90.00 from holding Nordon Indstrias Metalrgicas or generate 15.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.19% |
| Values | Daily Returns |
Nordon Indstrias Metalrgicas vs. Bank of America
Performance |
| Timeline |
| Nordon Indstrias Met |
| Bank of America |
Nordon Indstrias and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordon Indstrias and Bank of America
The main advantage of trading using opposite Nordon Indstrias and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordon Indstrias 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.| Nordon Indstrias vs. METISA Metalrgica Timboense | Nordon Indstrias vs. Lupatech SA | Nordon Indstrias vs. Refinaria de Petrleos | Nordon Indstrias vs. Electro Ao Altona |
| Bank of America vs. Energisa SA | Bank of America vs. BTG Pactual Logstica | Bank of America vs. Plano Plano Desenvolvimento | Bank of America vs. Ares 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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