Correlation Between Bank of America and Alliance Finance
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By analyzing existing cross correlation between Bank of America and Alliance Finance, you can compare the effects of market volatilities on Bank of America and Alliance Finance 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 Alliance Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Alliance Finance.
Diversification Opportunities for Bank of America and Alliance Finance
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Alliance is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Alliance Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Finance 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 Alliance Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Finance has no effect on the direction of Bank of America i.e., Bank of America and Alliance Finance go up and down completely randomly.
Pair Corralation between Bank of America and Alliance Finance
Considering the 90-day investment horizon Bank of America is expected to generate 1.91 times less return on investment than Alliance Finance. But when comparing it to its historical volatility, Bank of America is 1.39 times less risky than Alliance Finance. It trades about 0.06 of its potential returns per unit of risk. Alliance Finance is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,980 in Alliance Finance on August 27, 2024 and sell it today you would earn a total of 6,520 from holding Alliance Finance or generate 109.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.36% |
| Values | Daily Returns |
Bank of America vs. Alliance Finance
Performance |
| Timeline |
| Bank of America |
| Alliance Finance |
Bank of America and Alliance Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Alliance Finance
The main advantage of trading using opposite Bank of America and Alliance Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Alliance Finance 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 Alliance Finance will offset losses from the drop in Alliance Finance'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. Bank of Montreal |
| Alliance Finance vs. RENUKA FOODS PLC | Alliance Finance vs. Ceylon Hotels | Alliance Finance vs. Distilleries Company of | Alliance Finance vs. Lanka Realty Investments |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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