Correlation Between Bank of America and Dor Copper

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

Diversification Opportunities for Bank of America and Dor Copper

BankDorDiversified AwayBankDorDiversified Away100%
-0.37
  Correlation Coefficient

Very good diversification

The 3 months correlation between Bank and Dor is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Dor Copper Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dor Copper Mining 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 Dor Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dor Copper Mining has no effect on the direction of Bank of America i.e., Bank of America and Dor Copper go up and down completely randomly.

Pair Corralation between Bank of America and Dor Copper

Assuming the 90 days trading horizon Bank of America is expected to under-perform the Dor Copper. But the preferred stock apears to be less risky and, when comparing its historical volatility, Bank of America is 14.11 times less risky than Dor Copper. The preferred stock trades about -0.1 of its potential returns per unit of risk. The Dor Copper Mining is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  8.70  in Dor Copper Mining on September 27, 2024 and sell it today you would earn a total of  2.30  from holding Dor Copper Mining or generate 26.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Bank of America  vs.  Dor Copper Mining

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 020406080
JavaScript chart by amCharts 3.21.15BAC-PL DRCMF
       Timeline  
Bank of America 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 quite persistent fundamental indicators, Bank of America is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec1,2101,2201,2301,2401,2501,2601,270
Dor Copper Mining 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Dor Copper Mining are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating primary indicators, Dor Copper reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec0.080.090.10.110.120.130.14

Bank of America and Dor Copper Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.13-0.83-0.53-0.23-0.0240.120.420.721.021.32 0.20.40.60.8
JavaScript chart by amCharts 3.21.15BAC-PL DRCMF
       Returns  

Pair Trading with Bank of America and Dor Copper

The main advantage of trading using opposite Bank of America and Dor Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Dor Copper 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 Dor Copper will offset losses from the drop in Dor Copper's long position.
The idea behind Bank of America and Dor Copper Mining 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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