Correlation Between Aerofoam Metals and Bank of America

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Can any of the company-specific risk be diversified away by investing in both Aerofoam Metals 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 Aerofoam Metals 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 Aerofoam Metals and Bank of America, you can compare the effects of market volatilities on Aerofoam Metals 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 Aerofoam Metals with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerofoam Metals and Bank of America.

Diversification Opportunities for Aerofoam Metals and Bank of America

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Aerofoam and Bank is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aerofoam Metals 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 Aerofoam Metals 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 Aerofoam Metals 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 Aerofoam Metals i.e., Aerofoam Metals and Bank of America go up and down completely randomly.

Pair Corralation between Aerofoam Metals and Bank of America

If you would invest  0.01  in Aerofoam Metals on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Aerofoam Metals or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Aerofoam Metals  vs.  Bank of America

 Performance 
       Timeline  
Aerofoam Metals 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Aerofoam Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Aerofoam Metals is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.
Bank of America 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Bank of America are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Bank of America is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Aerofoam Metals and Bank of America Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aerofoam Metals and Bank of America

The main advantage of trading using opposite Aerofoam Metals and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerofoam Metals 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 Aerofoam Metals 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.
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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