Two Equities Correlation Analysis
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BAC
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This model provides you with a quick lookup of cross correlation between two equities. Please specify two instruments to run the correlation.
Diversification Opportunities for Bank of America and NYSE Composite
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and NYSE is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Bank Of America and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite 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 NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of Bank of America i.e., Bank of America and NYSE Composite go up and down completely randomly.
Pair Corralation between Bank of America and NYSE Composite
Considering the 90-day investment horizon Bank Of America is expected to generate 2.23 times more return on investment than NYSE Composite. However, Bank of America is 2.23 times more volatile than NYSE Composite. It trades about 0.1 of its potential returns per unit of risk. NYSE Composite is currently generating about 0.11 per unit of risk. If you would invest 2,712 in Bank Of America on December 30, 2023 and sell it today you would earn a total of 1,080 from holding Bank Of America or generate 39.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Bank Of America vs. NYSE Composite
Performance |
Timeline |
Bank of America and NYSE Composite Volatility Contrast
Predicted Return Density |
Returns |
Bank Of America
Pair trading matchups for Bank of America
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with Bank of America and NYSE Composite
The main advantage of trading using opposite Bank of America and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite's long position.Bank of America vs. Walt Disney | Bank of America vs. General Electric | Bank of America vs. McDonalds | Bank of America vs. International Business Machines |
NYSE Composite vs. Mediag3 | NYSE Composite vs. Douglas Emmett | NYSE Composite vs. United Homes Group | NYSE Composite vs. Reservoir Media |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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