Correlation Between Bank of America and American Mutual
Can any of the company-specific risk be diversified away by investing in both Bank of America and American Mutual 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 American Mutual 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 American Mutual Fund, you can compare the effects of market volatilities on Bank of America and American Mutual 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 American Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and American Mutual.
Diversification Opportunities for Bank of America and American Mutual
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and American is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and American Mutual Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Mutual 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 American Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Mutual has no effect on the direction of Bank of America i.e., Bank of America and American Mutual go up and down completely randomly.
Pair Corralation between Bank of America and American Mutual
Considering the 90-day investment horizon Bank of America is expected to generate 3.13 times more return on investment than American Mutual. However, Bank of America is 3.13 times more volatile than American Mutual Fund. It trades about 0.27 of its potential returns per unit of risk. American Mutual Fund is currently generating about 0.15 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. American Mutual Fund
Performance |
| Timeline |
| Bank of America |
| American Mutual |
Bank of America and American Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and American Mutual
The main advantage of trading using opposite Bank of America and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, American Mutual 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 American Mutual will offset losses from the drop in American Mutual'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 |
| American Mutual vs. Us Global Investors | American Mutual vs. Barings Global Floating | American Mutual vs. Dodge Global Stock | American Mutual vs. Ab Global Bond |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Commodity Directory Find actively traded commodities issued by global exchanges |