Correlation Between Bank of America and Clifton Mining

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

Diversification Opportunities for Bank of America and Clifton Mining

-0.37

Correlation Coefficient

Bank of America  Clifton Mining

Very good diversification

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

Pair Corralation between Bank of America and Clifton Mining

Considering the 90-day investment horizon Bank of America is expected to generate 0.23 times more return on investment than Clifton Mining. However, Bank of America is 4.37 times less risky than Clifton Mining. It trades about 0.12 of its potential returns per unit of risk. Clifton Mining Co is currently generating about -0.02 per unit of risk. If you would invest  4,166  in Bank of America on October 25, 2024 and sell it today you would earn a total of  473.00  from holding Bank of America or generate 11.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Bank of America  vs.  Clifton Mining Co

Bank of America

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of America are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Bank of America may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Clifton Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clifton Mining Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Bank of America and Clifton Mining

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

The idea behind Bank of America and Clifton Mining Co 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.