Correlation Between Joint Stock and 06051GEN5

Can any of the company-specific risk be diversified away by investing in both Joint Stock and 06051GEN5 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 Joint Stock and 06051GEN5 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Joint Stock and BANK OF AMERICA, you can compare the effects of market volatilities on Joint Stock and 06051GEN5 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 Joint Stock with a short position of 06051GEN5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Joint Stock and 06051GEN5.

Diversification Opportunities for Joint Stock and 06051GEN5

-0.01

Correlation Coefficient

Joint Stock  06051GEN5

Good diversification

The 3 months correlation between Joint and 06051GEN5 is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Joint Stock 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 Joint Stock 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 Joint Stock are associated (or correlated) with 06051GEN5. 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 Joint Stock i.e., Joint Stock and 06051GEN5 go up and down completely randomly.

Pair Corralation between Joint Stock and 06051GEN5

Given the investment horizon of 90 days Joint Stock is expected to under-perform the 06051GEN5. In addition to that, Joint Stock is 3.54 times more volatile than BANK OF AMERICA. It trades about -0.04 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  11,268  in BANK OF AMERICA on September 14, 2024 and sell it today you would lose (796.00) from holding BANK OF AMERICA or give up 7.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Joint Stock  vs.  BANK OF AMERICA

Joint Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Joint Stock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

BANK OF AMERICA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANK OF AMERICA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for BANK OF AMERICA investors.

Pair Trading with Joint Stock and 06051GEN5

The main advantage of trading using opposite Joint Stock and 06051GEN5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Joint Stock position performs unexpectedly, 06051GEN5 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 06051GEN5 will offset losses from the drop in 06051GEN5's long position.

The idea behind Joint Stock 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.

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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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.