Correlation Between Arrow Financial and Bank of America
Can any of the company-specific risk be diversified away by investing in both Arrow Financial 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 Arrow Financial 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 Arrow Financial and Bank of America, you can compare the effects of market volatilities on Arrow Financial 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 Arrow Financial with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Financial and Bank of America.
Diversification Opportunities for Arrow Financial and Bank of America
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Arrow and Bank is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Financial 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 Arrow Financial 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 Arrow Financial 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 Arrow Financial i.e., Arrow Financial and Bank of America go up and down completely randomly.
Pair Corralation between Arrow Financial and Bank of America
Given the investment horizon of 90 days Arrow Financial is expected to generate 1.51 times less return on investment than Bank of America. In addition to that, Arrow Financial is 3.14 times more volatile than Bank of America. It trades about 0.02 of its total potential returns per unit of risk. Bank of America is currently generating about 0.09 per unit of volatility. If you would invest 1,657 in Bank of America on September 2, 2024 and sell it today you would earn a total of 641.00 from holding Bank of America or generate 38.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow Financial vs. Bank of America
Performance |
| Timeline |
| Arrow Financial |
| Bank of America |
Arrow Financial and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Financial and Bank of America
The main advantage of trading using opposite Arrow Financial and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Financial 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.| Arrow Financial vs. Affinity Bancshares | Arrow Financial vs. Auburn National Bancorporation | Arrow Financial vs. First Community | Arrow Financial vs. LINKBANCORP |
| Bank of America vs. Bank of America | Bank of America vs. Bank of America | Bank of America vs. China Construction Bank | Bank of America vs. Bank of America |
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 the Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |