Correlation Between Bank of America and Ab Relative
Can any of the company-specific risk be diversified away by investing in both Bank of America and Ab Relative 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 Ab Relative 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 Ab Relative Value, you can compare the effects of market volatilities on Bank of America and Ab Relative 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 Ab Relative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Ab Relative.
Diversification Opportunities for Bank of America and Ab Relative
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and CBBYX is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Ab Relative Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Relative Value 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 Ab Relative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Relative Value has no effect on the direction of Bank of America i.e., Bank of America and Ab Relative go up and down completely randomly.
Pair Corralation between Bank of America and Ab Relative
Considering the 90-day investment horizon Bank of America is expected to generate 2.17 times more return on investment than Ab Relative. However, Bank of America is 2.17 times more volatile than Ab Relative Value. It trades about 0.05 of its potential returns per unit of risk. Ab Relative Value is currently generating about 0.08 per unit of risk. If you would invest 3,278 in Bank of America on August 26, 2024 and sell it today you would earn a total of 1,422 from holding Bank of America or generate 43.38% 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. Ab Relative Value
Performance |
| Timeline |
| Bank of America |
| Ab Relative Value |
Bank of America and Ab Relative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Ab Relative
The main advantage of trading using opposite Bank of America and Ab Relative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Ab Relative 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 Ab Relative will offset losses from the drop in Ab Relative'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 |
| Ab Relative vs. Ab Global E | Ab Relative vs. Ab Global E | Ab Relative vs. Ab Global E | Ab Relative vs. Ab Minnesota Portfolio |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |