Correlation Between Bank of America and Emerita Resources
Can any of the company-specific risk be diversified away by investing in both Bank of America and Emerita Resources 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 Emerita Resources 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 Emerita Resources Corp, you can compare the effects of market volatilities on Bank of America and Emerita Resources 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 Emerita Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Emerita Resources.
Diversification Opportunities for Bank of America and Emerita Resources
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bank and Emerita is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Emerita Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerita Resources Corp 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 Emerita Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerita Resources Corp has no effect on the direction of Bank of America i.e., Bank of America and Emerita Resources go up and down completely randomly.
Pair Corralation between Bank of America and Emerita Resources
Considering the 90-day investment horizon Bank of America is expected to under-perform the Emerita Resources. But the stock apears to be less risky and, when comparing its historical volatility, Bank of America is 4.44 times less risky than Emerita Resources. The stock trades about -0.04 of its potential returns per unit of risk. The Emerita Resources Corp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 78.00 in Emerita Resources Corp on December 1, 2024 and sell it today you would earn a total of 24.00 from holding Emerita Resources Corp or generate 30.77% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 91.3% |
Values | Daily Returns |
Bank of America vs. Emerita Resources Corp
Performance |
Timeline |
Bank of America |
Emerita Resources Corp |
Bank of America and Emerita Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of America and Emerita Resources
The main advantage of trading using opposite Bank of America and Emerita Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Emerita Resources 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 Emerita Resources will offset losses from the drop in Emerita Resources' long position.Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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