Correlation Between Bank of America and Grupo Nacional

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

Diversification Opportunities for Bank of America and Grupo Nacional

-0.35

Correlation Coefficient

Bank of America  Grupo Nacional

Very good diversification

The 3 months correlation between Bank and Grupo is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Grupo Nacional Provincial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Nacional Provincial 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 Grupo Nacional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Nacional Provincial has no effect on the direction of Bank of America i.e., Bank of America and Grupo Nacional go up and down completely randomly.

Pair Corralation between Bank of America and Grupo Nacional

Assuming the 90 days trading horizon Bank of America is expected to under-perform the Grupo Nacional. In addition to that, Bank of America is 1.41 times more volatile than Grupo Nacional Provincial. It trades about -0.06 of its total potential returns per unit of risk. Grupo Nacional Provincial is currently generating about 0.17 per unit of volatility. If you would invest  11,577  in Grupo Nacional Provincial on December 28, 2024 and sell it today you would earn a total of  1,423  from holding Grupo Nacional Provincial or generate 12.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Bank of America  vs.  Grupo Nacional Provincial

Bank of America

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank of America has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Grupo Nacional Provincial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Nacional Provincial are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Grupo Nacional may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Bank of America and Grupo Nacional

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

The idea behind Bank of America and Grupo Nacional Provincial 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.