Correlation Between Bank of America and Clarkston Partners
Can any of the company-specific risk be diversified away by investing in both Bank of America and Clarkston Partners 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 Clarkston Partners 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 Clarkston Partners Fund, you can compare the effects of market volatilities on Bank of America and Clarkston Partners 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 Clarkston Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Clarkston Partners.
Diversification Opportunities for Bank of America and Clarkston Partners
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Clarkston is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Clarkston Partners Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarkston Partners 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 Clarkston Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarkston Partners has no effect on the direction of Bank of America i.e., Bank of America and Clarkston Partners go up and down completely randomly.
Pair Corralation between Bank of America and Clarkston Partners
Considering the 90-day investment horizon Bank of America is expected to generate 1.9 times more return on investment than Clarkston Partners. However, Bank of America is 1.9 times more volatile than Clarkston Partners Fund. It trades about 0.11 of its potential returns per unit of risk. Clarkston Partners Fund is currently generating about 0.11 per unit of risk. If you would invest 3,949 in Bank of America on August 29, 2024 and sell it today you would earn a total of 828.00 from holding Bank of America or generate 20.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Clarkston Partners Fund
Performance |
| Timeline |
| Bank of America |
| Clarkston Partners |
Bank of America and Clarkston Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Clarkston Partners
The main advantage of trading using opposite Bank of America and Clarkston Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Clarkston Partners 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 Clarkston Partners will offset losses from the drop in Clarkston Partners' 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 |
| Clarkston Partners vs. Vanguard Mid Cap Value | Clarkston Partners vs. HUMANA INC | Clarkston Partners vs. Aquagold International | Clarkston Partners vs. Barloworld Ltd ADR |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |