Correlation Between Bank of America and Ave Maria
Can any of the company-specific risk be diversified away by investing in both Bank of America and Ave Maria 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 Ave Maria 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 Ave Maria Bond, you can compare the effects of market volatilities on Bank of America and Ave Maria 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 Ave Maria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Ave Maria.
Diversification Opportunities for Bank of America and Ave Maria
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Ave is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Ave Maria Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ave Maria Bond 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 Ave Maria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ave Maria Bond has no effect on the direction of Bank of America i.e., Bank of America and Ave Maria go up and down completely randomly.
Pair Corralation between Bank of America and Ave Maria
Considering the 90-day investment horizon Bank of America is expected to generate 4.93 times more return on investment than Ave Maria. However, Bank of America is 4.93 times more volatile than Ave Maria Bond. It trades about -0.03 of its potential returns per unit of risk. Ave Maria Bond is currently generating about -0.14 per unit of risk. If you would invest 4,724 in Bank of America on October 26, 2024 and sell it today you would lose (72.00) from holding Bank of America or give up 1.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.5% |
| Values | Daily Returns |
Bank of America vs. Ave Maria Bond
Performance |
| Timeline |
| Bank of America |
| Ave Maria Bond |
Bank of America and Ave Maria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Ave Maria
The main advantage of trading using opposite Bank of America and Ave Maria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Ave Maria 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 Ave Maria will offset losses from the drop in Ave Maria's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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