Correlation Between Bank of America and SPASX Dividend
Can any of the company-specific risk be diversified away by investing in both Bank of America and SPASX Dividend 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 SPASX Dividend 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 SPASX Dividend Opportunities, you can compare the effects of market volatilities on Bank of America and SPASX Dividend 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 SPASX Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and SPASX Dividend.
Diversification Opportunities for Bank of America and SPASX Dividend
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and SPASX is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and SPASX Dividend Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPASX Dividend Oppor 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 SPASX Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPASX Dividend Oppor has no effect on the direction of Bank of America i.e., Bank of America and SPASX Dividend go up and down completely randomly.
Pair Corralation between Bank of America and SPASX Dividend
Considering the 90-day investment horizon Bank of America is expected to generate 2.16 times more return on investment than SPASX Dividend. However, Bank of America is 2.16 times more volatile than SPASX Dividend Opportunities. It trades about 0.08 of its potential returns per unit of risk. SPASX Dividend Opportunities is currently generating about 0.02 per unit of risk. If you would invest 2,660 in Bank of America on November 27, 2024 and sell it today you would earn a total of 1,786 from holding Bank of America or generate 67.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.95% |
| Values | Daily Returns |
Bank of America vs. SPASX Dividend Opportunities
Performance |
| Timeline |
Bank of America and SPASX Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Bank of America
Pair trading matchups for Bank of America
SPASX Dividend Opportunities
Pair trading matchups for SPASX Dividend
Pair Trading with Bank of America and SPASX Dividend
The main advantage of trading using opposite Bank of America and SPASX Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, SPASX Dividend 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 SPASX Dividend will offset losses from the drop in SPASX Dividend'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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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