Correlation Between Bank of AmericaCDR and Farstarcap Investment

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

Diversification Opportunities for Bank of AmericaCDR and Farstarcap Investment

0.0

Correlation Coefficient

Bank of AmericaCDR  Farstarcap Investment

Pay attention - limited upside

The 3 months correlation between Bank and Farstarcap is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Farstarcap Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farstarcap Investment and Bank of AmericaCDR 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 Farstarcap Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farstarcap Investment has no effect on the direction of Bank of AmericaCDR i.e., Bank of AmericaCDR and Farstarcap Investment go up and down completely randomly.

Pair Corralation between Bank of AmericaCDR and Farstarcap Investment

If you would invest  2,268  in Bank of America on April 5, 2025 and sell it today you would earn a total of  247.00  from holding Bank of America or generate 10.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Bank of America  vs.  Farstarcap Investment Corp

Bank of AmericaCDR

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of America are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Bank of AmericaCDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Farstarcap Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Farstarcap Investment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Farstarcap Investment is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Bank of AmericaCDR and Farstarcap Investment

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

The idea behind Bank of America and Farstarcap Investment Corp 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.