Correlation Between Advent Wireless and Bank of America

Can any of the company-specific risk be diversified away by investing in both Advent Wireless and Bank of America 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 Advent Wireless and Bank of America into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Advent Wireless and Bank of America, you can compare the effects of market volatilities on Advent Wireless and Bank of America 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 Advent Wireless with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advent Wireless and Bank of America.

Diversification Opportunities for Advent Wireless and Bank of America

-0.38

Correlation Coefficient

Advent Wireless  Bank of America

Very good diversification

The 3 months correlation between Advent and Bank is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Advent Wireless and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of America and Advent Wireless 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 Advent Wireless are associated (or correlated) with Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of America has no effect on the direction of Advent Wireless i.e., Advent Wireless and Bank of America go up and down completely randomly.

Pair Corralation between Advent Wireless and Bank of America

Assuming the 90 days horizon Advent Wireless is expected to under-perform the Bank of America. In addition to that, Advent Wireless is 2.18 times more volatile than Bank of America. It trades about -0.07 of its total potential returns per unit of risk. Bank of America is currently generating about 0.27 per unit of volatility. If you would invest  1,965  in Bank of America on April 22, 2025 and sell it today you would earn a total of  459.00  from holding Bank of America or generate 23.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Advent Wireless  vs.  Bank of America

Advent Wireless

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advent Wireless has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Bank of America

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of America are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Bank of America exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advent Wireless and Bank of America

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

The idea behind Advent Wireless and Bank of America 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..