Correlation Between Bank of America and Brookfield Global
Can any of the company-specific risk be diversified away by investing in both Bank of America and Brookfield Global 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 Brookfield Global 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 Brookfield Global Listed, you can compare the effects of market volatilities on Bank of America and Brookfield Global 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 Brookfield Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Brookfield Global.
Diversification Opportunities for Bank of America and Brookfield Global
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Brookfield is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Brookfield Global Listed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Global Listed 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 Brookfield Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Global Listed has no effect on the direction of Bank of America i.e., Bank of America and Brookfield Global go up and down completely randomly.
Pair Corralation between Bank of America and Brookfield Global
Considering the 90-day investment horizon Bank of America is expected to generate 1.97 times more return on investment than Brookfield Global. However, Bank of America is 1.97 times more volatile than Brookfield Global Listed. It trades about 0.11 of its potential returns per unit of risk. Brookfield Global Listed is currently generating about 0.05 per unit of risk. If you would invest 2,583 in Bank of America on August 26, 2024 and sell it today you would earn a total of 2,117 from holding Bank of America or generate 81.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Brookfield Global Listed
Performance |
| Timeline |
| Bank of America |
| Brookfield Global Listed |
Bank of America and Brookfield Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Brookfield Global
The main advantage of trading using opposite Bank of America and Brookfield Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Brookfield Global 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 Brookfield Global will offset losses from the drop in Brookfield Global's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Brookfield Global vs. Brookfield Global Listed | Brookfield Global vs. Brookfield Global Listed | Brookfield Global vs. Brookfield Global Listed | Brookfield Global vs. Brookfield Global Listed |
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
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |