Correlation Between Bank of America and Real Estate
Can any of the company-specific risk be diversified away by investing in both Bank of America and Real Estate 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 Real Estate 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 Real Estate Fund, you can compare the effects of market volatilities on Bank of America and Real Estate 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 Real Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Real Estate.
Diversification Opportunities for Bank of America and Real Estate
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bank and Real is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Real Estate Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate Fund 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 Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate Fund has no effect on the direction of Bank of America i.e., Bank of America and Real Estate go up and down completely randomly.
Pair Corralation between Bank of America and Real Estate
Considering the 90-day investment horizon Bank of America is expected to generate 1.84 times more return on investment than Real Estate. However, Bank of America is 1.84 times more volatile than Real Estate Fund. It trades about 0.11 of its potential returns per unit of risk. Real Estate Fund is currently generating about 0.18 per unit of risk. If you would invest 3,918 in Bank of America on September 2, 2024 and sell it today you would earn a total of 833.00 from holding Bank of America or generate 21.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Real Estate Fund
Performance |
| Timeline |
| Bank of America |
| Real Estate Fund |
Bank of America and Real Estate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Real Estate
The main advantage of trading using opposite Bank of America and Real Estate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Real Estate 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 Real Estate will offset losses from the drop in Real Estate's long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Real Estate vs. Utilities Fund Investor | Real Estate vs. Emerging Markets Fund | Real Estate vs. Heritage Fund Investor | Real Estate vs. Value Fund Investor |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |