Correlation Between Bank of America and Inspire Global
Can any of the company-specific risk be diversified away by investing in both Bank of America and Inspire 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 Inspire 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 Inspire Global Hope, you can compare the effects of market volatilities on Bank of America and Inspire 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 Inspire Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Inspire Global.
Diversification Opportunities for Bank of America and Inspire Global
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bank and Inspire is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Inspire Global Hope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspire Global Hope 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 Inspire Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspire Global Hope has no effect on the direction of Bank of America i.e., Bank of America and Inspire Global go up and down completely randomly.
Pair Corralation between Bank of America and Inspire Global
Considering the 90-day investment horizon Bank of America is expected to generate 1.78 times more return on investment than Inspire Global. However, Bank of America is 1.78 times more volatile than Inspire Global Hope. It trades about 0.12 of its potential returns per unit of risk. Inspire Global Hope is currently generating about 0.07 per unit of risk. If you would invest 2,787 in Bank of America on August 29, 2024 and sell it today you would earn a total of 1,990 from holding Bank of America or generate 71.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Inspire Global Hope
Performance |
| Timeline |
| Bank of America |
| Inspire Global Hope |
Bank of America and Inspire Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Inspire Global
The main advantage of trading using opposite Bank of America and Inspire Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Inspire 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 Inspire Global will offset losses from the drop in Inspire Global'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. JPMorgan Chase Co |
| Inspire Global vs. Mackenzie Canadian Equity | Inspire Global vs. Mackenzie Large Cap | Inspire Global vs. BMO MSCI EAFE | Inspire Global vs. BMO Long Federal |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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