Correlation Between B of A and Badger DAO

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Can any of the company-specific risk be diversified away by investing in both B of A and Badger DAO 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 B of A and Badger DAO 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 Badger DAO, you can compare the effects of market volatilities on B of A and Badger DAO 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 B of A with a short position of Badger DAO. Check out your portfolio center. Please also check ongoing floating volatility patterns of B of A and Badger DAO.

Diversification Opportunities for B of A and Badger DAO

0.63
  Correlation Coefficient

Poor diversification

The 3 months correlation between B of A and Badger is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Bank Of America and Badger DAO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Badger DAO and B of A 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 Badger DAO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Badger DAO has no effect on the direction of B of A i.e., B of A and Badger DAO go up and down completely randomly.

Pair Corralation between B of A and Badger DAO

Considering the 90-day investment horizon Bank Of America is expected to under-perform the Badger DAO. But the stock apears to be less risky and, when comparing its historical volatility, Bank Of America is 3.32 times less risky than Badger DAO. The stock trades about -0.23 of its potential returns per unit of risk. The Badger DAO is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  379.00  in Badger DAO on July 1, 2022 and sell it today you would earn a total of  28.00  from holding Badger DAO or generate 7.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy59.09%
ValuesDaily Returns

Bank Of America  vs.  Badger DAO

 Performance (%) 
       Timeline  
Bank Of America 
B of A Performance
0 of 100
Over the last 90 days Bank Of America has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, B of A is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

B of A Price Channel

Badger DAO 
Badger Performance
0 of 100
Over the last 90 days Badger DAO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak technical and fundamental indicators, Badger DAO sustained solid returns over the last few months and may actually be approaching a breakup point.

B of A and Badger DAO Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with B of A and Badger DAO

The main advantage of trading using opposite B of A and Badger DAO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B of A position performs unexpectedly, Badger DAO 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 Badger DAO will offset losses from the drop in Badger DAO's long position.
B of A vs. Amazon Inc
The idea behind Bank Of America and Badger DAO 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.
Badger DAO vs. Staked Ether
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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