Correlation Between Bank of America and L3Harris Technologies
Can any of the company-specific risk be diversified away by investing in both Bank of America and L3Harris Technologies 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 America and L3Harris Technologies 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 L3Harris Technologies, you can compare the effects of market volatilities on Bank of America and L3Harris Technologies 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 America with a short position of L3Harris Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and L3Harris Technologies.
Diversification Opportunities for Bank of America and L3Harris Technologies
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and L3Harris is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and L3Harris Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L3Harris Technologies and Bank of America 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 L3Harris Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L3Harris Technologies has no effect on the direction of Bank of America i.e., Bank of America and L3Harris Technologies go up and down completely randomly.
Pair Corralation between Bank of America and L3Harris Technologies
Considering the 90-day investment horizon Bank of America is expected to under-perform the L3Harris Technologies. In addition to that, Bank of America is 1.78 times more volatile than L3Harris Technologies. It trades about -0.13 of its total potential returns per unit of risk. L3Harris Technologies is currently generating about 0.08 per unit of volatility. If you would invest 21,199 in L3Harris Technologies on January 18, 2025 and sell it today you would earn a total of 637.00 from holding L3Harris Technologies or generate 3.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bank of America vs. L3Harris Technologies
Performance |
| Timeline |
| Bank of America |
| L3Harris Technologies |
Bank of America and L3Harris Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and L3Harris Technologies
The main advantage of trading using opposite Bank of America and L3Harris Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, L3Harris Technologies 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 L3Harris Technologies will offset losses from the drop in L3Harris Technologies' long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
| L3Harris Technologies vs. Rightmove PLC | L3Harris Technologies vs. Games Workshop Group | L3Harris Technologies vs. Santhera Pharmaceuticals Holding | L3Harris Technologies vs. Auto Trader Group |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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