Correlation Between Bank of America and LS 1x
Can any of the company-specific risk be diversified away by investing in both Bank of America and LS 1x 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 LS 1x 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 LS 1x Amazon, you can compare the effects of market volatilities on Bank of America and LS 1x 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 LS 1x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and LS 1x.
Diversification Opportunities for Bank of America and LS 1x
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and 1AMZ is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and LS 1x Amazon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LS 1x Amazon 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 LS 1x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LS 1x Amazon has no effect on the direction of Bank of America i.e., Bank of America and LS 1x go up and down completely randomly.
Pair Corralation between Bank of America and LS 1x
Considering the 90-day investment horizon Bank of America is expected to generate 1.04 times more return on investment than LS 1x. However, Bank of America is 1.04 times more volatile than LS 1x Amazon. It trades about 0.22 of its potential returns per unit of risk. LS 1x Amazon is currently generating about 0.14 per unit of risk. If you would invest 4,265 in Bank of America on August 25, 2024 and sell it today you would earn a total of 435.00 from holding Bank of America or generate 10.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. LS 1x Amazon
Performance |
| Timeline |
| Bank of America |
| LS 1x Amazon |
Bank of America and LS 1x Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and LS 1x
The main advantage of trading using opposite Bank of America and LS 1x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, LS 1x 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 LS 1x will offset losses from the drop in LS 1x's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Canadian Imperial Bank |
| LS 1x vs. Scottish Mortgage Investment | LS 1x vs. VinaCapital Vietnam Opportunity | LS 1x vs. Edinburgh Worldwide Investment | LS 1x vs. Baillie Gifford Growth |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |