Correlation Between B of A and Aberdeen Ultra

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

Diversification Opportunities for B of A and Aberdeen Ultra

0.47
  Correlation Coefficient

Very weak diversification

The 3 months correlation between B of A and Aberdeen is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bank Of America and Aberdeen Ultra Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Ultra Short 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 Aberdeen Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Ultra Short has no effect on the direction of B of A i.e., B of A and Aberdeen Ultra go up and down completely randomly.

Pair Corralation between B of A and Aberdeen Ultra

Considering the 90-day investment horizon Bank Of America is expected to generate 83.36 times more return on investment than Aberdeen Ultra. However, B of A is 83.36 times more volatile than Aberdeen Ultra Short. It trades about 0.04 of its potential returns per unit of risk. Aberdeen Ultra Short is currently generating about -0.01 per unit of risk. If you would invest  2,360  in Bank Of America on June 27, 2022 and sell it today you would earn a total of  813.00  from holding Bank Of America or generate 34.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy99.8%
ValuesDaily Returns

Bank Of America  vs.  Aberdeen Ultra Short

 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 current stock price disturbance, may contribute to short-term losses for the investors.

B of A Price Channel

Aberdeen Ultra Short 
Aberdeen Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Ultra Short are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Aberdeen Ultra is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Aberdeen Price Channel

B of A and Aberdeen Ultra Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with B of A and Aberdeen Ultra

The main advantage of trading using opposite B of A and Aberdeen Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B of A position performs unexpectedly, Aberdeen Ultra 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 Aberdeen Ultra will offset losses from the drop in Aberdeen Ultra's long position.
B of A vs. China Construction B
The idea behind Bank Of America and Aberdeen Ultra Short 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.
Aberdeen Ultra vs. American Express
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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