Correlation Between Bank of America and Target Corp
Can any of the company-specific risk be diversified away by investing in both Bank of America and Target Corp 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 Target Corp 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 Target Corp, you can compare the effects of market volatilities on Bank of America and Target Corp 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 Target Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Target Corp.
Diversification Opportunities for Bank of America and Target Corp
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Target is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Target Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Corp 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 Target Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Corp has no effect on the direction of Bank of America i.e., Bank of America and Target Corp go up and down completely randomly.
Pair Corralation between Bank of America and Target Corp
Considering the 90-day investment horizon Bank of America is expected to generate 0.4 times more return on investment than Target Corp. However, Bank of America is 2.5 times less risky than Target Corp. It trades about 0.27 of its potential returns per unit of risk. Target Corp is currently generating about -0.09 per unit of risk. If you would invest 4,253 in Bank of America on August 30, 2024 and sell it today you would earn a total of 524.00 from holding Bank of America or generate 12.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bank of America vs. Target Corp
Performance |
| Timeline |
| Bank of America |
| Target Corp |
Bank of America and Target Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Target Corp
The main advantage of trading using opposite Bank of America and Target Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Target Corp 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 Target Corp will offset losses from the drop in Target Corp's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings |
| Target Corp vs. Lowland Investment Co | Target Corp vs. MediaZest plc | Target Corp vs. Hansa Investment | Target Corp vs. Atresmedia |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |