Correlation Between Bank of America and Strategic Allocation
Can any of the company-specific risk be diversified away by investing in both Bank of America and Strategic Allocation 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 Strategic Allocation 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 Strategic Allocation Aggressive, you can compare the effects of market volatilities on Bank of America and Strategic Allocation 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 Strategic Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Strategic Allocation.
Diversification Opportunities for Bank of America and Strategic Allocation
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bank and Strategic is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Strategic Allocation Aggressiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Allocation 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 Strategic Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Allocation has no effect on the direction of Bank of America i.e., Bank of America and Strategic Allocation go up and down completely randomly.
Pair Corralation between Bank of America and Strategic Allocation
Considering the 90-day investment horizon Bank of America is expected to under-perform the Strategic Allocation. In addition to that, Bank of America is 1.79 times more volatile than Strategic Allocation Aggressive. It trades about -0.33 of its total potential returns per unit of risk. Strategic Allocation Aggressive is currently generating about -0.04 per unit of volatility. If you would invest 803.00 in Strategic Allocation Aggressive on November 29, 2024 and sell it today you would lose (4.00) from holding Strategic Allocation Aggressive or give up 0.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Strategic Allocation Aggressiv
Performance |
| Timeline |
| Bank of America |
| Strategic Allocation |
Bank of America and Strategic Allocation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Strategic Allocation
The main advantage of trading using opposite Bank of America and Strategic Allocation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Strategic Allocation 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 Strategic Allocation will offset losses from the drop in Strategic Allocation's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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