Correlation Between Bank of America and Actelis Networks

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

Diversification Opportunities for Bank of America and Actelis Networks

0.74

Correlation Coefficient

Bank of America  Actelis Networks

Poor diversification

The 3 months correlation between Bank and Actelis is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Actelis Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Actelis Networks 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 Actelis Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Actelis Networks has no effect on the direction of Bank of America i.e., Bank of America and Actelis Networks go up and down completely randomly.

Pair Corralation between Bank of America and Actelis Networks

Considering the 90-day investment horizon Bank of America is expected to generate 0.21 times more return on investment than Actelis Networks. However, Bank of America is 4.77 times less risky than Actelis Networks. It trades about -0.02 of its potential returns per unit of risk. Actelis Networks is currently generating about -0.04 per unit of risk. If you would invest  4,363  in Bank of America on December 28, 2024 and sell it today you would lose (107.00) from holding Bank of America or give up 2.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Bank of America  vs.  Actelis Networks

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 rather sound basic indicators, Bank of America is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Actelis Networks

Risk-Adjusted Performance

Very Weak

Over the last 90 days Actelis Networks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Bank of America and Actelis Networks

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

The idea behind Bank of America and Actelis Networks 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.