Correlation Between Bank of America and 670346AU9

Can any of the company-specific risk be diversified away by investing in both Bank of America and 670346AU9 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 Bank of America and 670346AU9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bank of America and NUE 2979 15 DEC 55, you can compare the effects of market volatilities on Bank of America and 670346AU9 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 Bank of America with a short position of 670346AU9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and 670346AU9.

Diversification Opportunities for Bank of America and 670346AU9

-0.46

Correlation Coefficient

Bank of America  670346AU9

Very good diversification

The 3 months correlation between Bank and 670346AU9 is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and NUE 2979 15 DEC 55 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NUE 2979 15 and Bank of America 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 Bank of America are associated (or correlated) with 670346AU9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NUE 2979 15 has no effect on the direction of Bank of America i.e., Bank of America and 670346AU9 go up and down completely randomly.

Pair Corralation between Bank of America and 670346AU9

Considering the 90-day investment horizon Bank of America is expected to generate 0.53 times more return on investment than 670346AU9. However, Bank of America is 1.87 times less risky than 670346AU9. It trades about 0.11 of its potential returns per unit of risk. NUE 2979 15 DEC 55 is currently generating about 0.05 per unit of risk. If you would invest  3,965  in Bank of America on September 23, 2024 and sell it today you would earn a total of  452.00  from holding Bank of America or generate 11.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	76.92%
Values	Daily Returns

Bank of America  vs.  NUE 2979 15 DEC 55

Bank of America

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of America are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Bank of America may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NUE 2979 15

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NUE 2979 15 DEC 55 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, 670346AU9 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bank of America and 670346AU9

The main advantage of trading using opposite Bank of America and 670346AU9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, 670346AU9 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 670346AU9 will offset losses from the drop in 670346AU9's long position.

The idea behind Bank of America and NUE 2979 15 DEC 55 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.