Correlation Between B of A and Pirate Chain

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

Diversification Opportunities for B of A and Pirate Chain

0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between B of A and Pirate is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Bank Of America and Pirate Chain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pirate Chain 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 Pirate Chain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pirate Chain has no effect on the direction of B of A i.e., B of A and Pirate Chain go up and down completely randomly.

Pair Corralation between B of A and Pirate Chain

Considering the 90-day investment horizon Bank Of America is expected to generate 0.58 times more return on investment than Pirate Chain. However, Bank Of America is 1.72 times less risky than Pirate Chain. It trades about -0.08 of its potential returns per unit of risk. Pirate Chain is currently generating about -0.14 per unit of risk. If you would invest  3,306  in Bank Of America on July 8, 2022 and sell it today you would lose (138.00)  from holding Bank Of America or give up 4.17% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

Bank Of America  vs.  Pirate Chain

 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

Pirate Chain 
Pirate Performance
0 of 100
Over the last 90 days Pirate Chain has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Crypto's basic indicators remain somewhat strong which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long term up-swing for Pirate Chain investors.

Pirate Price Channel

B of A and Pirate Chain Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with B of A and Pirate Chain

The main advantage of trading using opposite B of A and Pirate Chain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B of A position performs unexpectedly, Pirate Chain 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 Pirate Chain will offset losses from the drop in Pirate Chain's long position.
B of A vs. Amazon Inc
The idea behind Bank Of America and Pirate Chain 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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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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