Correlation Between Bank of America and BetaShares Global
Can any of the company-specific risk be diversified away by investing in both Bank of America and BetaShares 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 BetaShares 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 BetaShares Global Banks, you can compare the effects of market volatilities on Bank of America and BetaShares 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 BetaShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and BetaShares Global.
Diversification Opportunities for Bank of America and BetaShares Global
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and BetaShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and BetaShares Global Banks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Global Banks 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 BetaShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Global Banks has no effect on the direction of Bank of America i.e., Bank of America and BetaShares Global go up and down completely randomly.
Pair Corralation between Bank of America and BetaShares Global
Considering the 90-day investment horizon Bank of America is expected to generate 2.05 times more return on investment than BetaShares Global. However, Bank of America is 2.05 times more volatile than BetaShares Global Banks. It trades about 0.27 of its potential returns per unit of risk. BetaShares Global Banks is currently generating about 0.28 per unit of risk. If you would invest 4,262 in Bank of America on August 29, 2024 and sell it today you would earn a total of 523.50 from holding Bank of America or generate 12.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. BetaShares Global Banks
Performance |
| Timeline |
| Bank of America |
| BetaShares Global Banks |
Bank of America and BetaShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and BetaShares Global
The main advantage of trading using opposite Bank of America and BetaShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, BetaShares 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 BetaShares Global will offset losses from the drop in BetaShares 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 |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |