Correlation Between NEWELL and Bank of America
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By analyzing existing cross correlation between NEWELL BRANDS INC and Bank of America, you can compare the effects of market volatilities on NEWELL 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 NEWELL with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEWELL and Bank of America.
Diversification Opportunities for NEWELL and Bank of America
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NEWELL and Bank is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding NEWELL BRANDS INC 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 NEWELL 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 NEWELL BRANDS INC 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 NEWELL i.e., NEWELL and Bank of America go up and down completely randomly.
Pair Corralation between NEWELL and Bank of America
Assuming the 90 days trading horizon NEWELL BRANDS INC is expected to under-perform the Bank of America. In addition to that, NEWELL is 1.35 times more volatile than Bank of America. It trades about -0.2 of its total potential returns per unit of risk. Bank of America is currently generating about 0.32 per unit of volatility. If you would invest 4,176 in Bank of America on September 2, 2024 and sell it today you would earn a total of 575.00 from holding Bank of America or generate 13.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 38.1% |
| Values | Daily Returns |
NEWELL BRANDS INC vs. Bank of America
Performance |
| Timeline |
| NEWELL BRANDS INC |
| Bank of America |
NEWELL and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEWELL and Bank of America
The main advantage of trading using opposite NEWELL and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEWELL 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.The idea behind NEWELL BRANDS INC and Bank of America pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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