Correlation Between Bank of America and Oron Group

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

Diversification Opportunities for Bank of America and Oron Group

0.3

Correlation Coefficient

Bank of America  Oron Group

Weak diversification

The 3 months correlation between Bank and Oron is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Oron Group Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oron Group Investments 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 Oron Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oron Group Investments has no effect on the direction of Bank of America i.e., Bank of America and Oron Group go up and down completely randomly.

Pair Corralation between Bank of America and Oron Group

Considering the 90-day investment horizon Bank of America is expected to generate 12.72 times less return on investment than Oron Group. But when comparing it to its historical volatility, Bank of America is 1.28 times less risky than Oron Group. It trades about 0.04 of its potential returns per unit of risk. Oron Group Investments is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest  89,670  in Oron Group Investments on November 20, 2024 and sell it today you would earn a total of  31,530  from holding Oron Group Investments or generate 35.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	84.75%
Values	Daily Returns

Bank of America  vs.  Oron Group Investments

Bank of America

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of America are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Bank of America is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Oron Group Investments

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Oron Group Investments are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Oron Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank of America and Oron Group

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

The idea behind Bank of America and Oron Group Investments 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.