Correlation Between Beyond Meat and Bank of America

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

Diversification Opportunities for Beyond Meat and Bank of America

-0.79
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Beyond and Bank is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Beyond Meat 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 Beyond Meat 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 Beyond Meat 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 Beyond Meat i.e., Beyond Meat and Bank of America go up and down completely randomly.

Pair Corralation between Beyond Meat and Bank of America

Assuming the 90 days trading horizon Beyond Meat is expected to under-perform the Bank of America. In addition to that, Beyond Meat is 2.21 times more volatile than Bank of America. It trades about -0.15 of its total potential returns per unit of risk. Bank of America is currently generating about 0.23 per unit of volatility. If you would invest  5,387  in Bank of America on September 30, 2024 and sell it today you would earn a total of  1,481  from holding Bank of America or generate 27.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Beyond Meat  vs.  Bank of America

 Performance 
       Timeline  
Beyond Meat 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Beyond Meat has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Bank of America 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Bank of America are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bank of America sustained solid returns over the last few months and may actually be approaching a breakup point.

Beyond Meat and Bank of America Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Beyond Meat and Bank of America

The main advantage of trading using opposite Beyond Meat and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beyond Meat 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 Beyond Meat 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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