Correlation Between Bank of America and Guerrilla

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

Diversification Opportunities for Bank of America and Guerrilla

-0.83

Correlation Coefficient

Bank of America  Guerrilla

Pay attention - limited upside

The 3 months correlation between Bank and Guerrilla is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Guerrilla RF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guerrilla RF 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 Guerrilla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guerrilla RF has no effect on the direction of Bank of America i.e., Bank of America and Guerrilla go up and down completely randomly.

Pair Corralation between Bank of America and Guerrilla

Considering the 90-day investment horizon Bank of America is expected to generate 1.97 times less return on investment than Guerrilla. But when comparing it to its historical volatility, Bank of America is 12.66 times less risky than Guerrilla. It trades about 0.28 of its potential returns per unit of risk. Guerrilla RF is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  145.00  in Guerrilla RF on October 22, 2024 and sell it today you would lose (9.00) from holding Guerrilla RF or give up 6.21% of portfolio value over 90 days.

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

Bank of America  vs.  Guerrilla RF

Bank of America

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of America are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Bank of America may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Guerrilla RF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guerrilla RF has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Bank of America and Guerrilla

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

The idea behind Bank of America and Guerrilla RF 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.