Correlation Between 06051GEN5 and Joint Stock

Can any of the company-specific risk be diversified away by investing in both 06051GEN5 and Joint Stock 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 06051GEN5 and Joint Stock 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 Joint Stock, you can compare the effects of market volatilities on 06051GEN5 and Joint Stock 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 06051GEN5 with a short position of Joint Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of 06051GEN5 and Joint Stock.

Diversification Opportunities for 06051GEN5 and Joint Stock

0.02

Correlation Coefficient

06051GEN5  Joint Stock

Significant diversification

The 3 months correlation between 06051GEN5 and Joint is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding BANK OF AMERICA and Joint Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joint Stock and 06051GEN5 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 Joint Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joint Stock has no effect on the direction of 06051GEN5 i.e., 06051GEN5 and Joint Stock go up and down completely randomly.

Pair Corralation between 06051GEN5 and Joint Stock

Assuming the 90 days trading horizon BANK OF AMERICA is expected to under-perform the Joint Stock. But the bond apears to be less risky and, when comparing its historical volatility, BANK OF AMERICA is 2.09 times less risky than Joint Stock. The bond trades about -0.09 of its potential returns per unit of risk. The Joint Stock is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  10,655  in Joint Stock on September 13, 2024 and sell it today you would earn a total of  98.00  from holding Joint Stock or generate 0.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.7%
Values	Daily Returns

BANK OF AMERICA  vs.  Joint Stock

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 inconsistent 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.

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 weak 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.

Pair Trading with 06051GEN5 and Joint Stock

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

The idea behind BANK OF AMERICA and Joint Stock 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.