Correlation Between Bank of America and Bound
Can any of the company-specific risk be diversified away by investing in both Bank of America and Bound 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 Bound 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 Bound and Beyond, you can compare the effects of market volatilities on Bank of America and Bound 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 Bound. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Bound.
Diversification Opportunities for Bank of America and Bound
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Bound is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Bound and Beyond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bound and Beyond 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 Bound. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bound and Beyond has no effect on the direction of Bank of America i.e., Bank of America and Bound go up and down completely randomly.
Pair Corralation between Bank of America and Bound
Considering the 90-day investment horizon Bank of America is expected to generate 1.21 times more return on investment than Bound. However, Bank of America is 1.21 times more volatile than Bound and Beyond. It trades about 0.35 of its potential returns per unit of risk. Bound and Beyond is currently generating about -0.02 per unit of risk. If you would invest 4,133 in Bank of America on September 3, 2024 and sell it today you would earn a total of 618.00 from holding Bank of America or generate 14.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Bank of America vs. Bound and Beyond
Performance |
| Timeline |
| Bank of America |
| Bound and Beyond |
Bank of America and Bound Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Bound
The main advantage of trading using opposite Bank of America and Bound positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Bound 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 Bound will offset losses from the drop in Bound's long position.| Bank of America vs. Partner Communications | Bank of America vs. Merck Company | Bank of America vs. Western Midstream Partners | Bank of America vs. Edgewise Therapeutics |
| Bound vs. BCPG Public | Bound vs. Aqua Public | Bound vs. Energy Absolute Public | Bound vs. Bangkok Aviation Fuel |
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
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |