Correlation Between Bank of America and National Retail
Can any of the company-specific risk be diversified away by investing in both Bank of America and National Retail 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 National Retail 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 National Retail Properties, you can compare the effects of market volatilities on Bank of America and National Retail 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 National Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and National Retail.
Diversification Opportunities for Bank of America and National Retail
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and National is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and National Retail Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Retail Prop 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 National Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Retail Prop has no effect on the direction of Bank of America i.e., Bank of America and National Retail go up and down completely randomly.
Pair Corralation between Bank of America and National Retail
Considering the 90-day investment horizon Bank of America is expected to generate 0.92 times more return on investment than National Retail. However, Bank of America is 1.09 times less risky than National Retail. It trades about 0.29 of its potential returns per unit of risk. National Retail Properties is currently generating about 0.03 per unit of risk. If you would invest 4,231 in Bank of America on August 31, 2024 and sell it today you would earn a total of 546.00 from holding Bank of America or generate 12.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. National Retail Properties
Performance |
| Timeline |
| Bank of America |
| National Retail Prop |
Bank of America and National Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and National Retail
The main advantage of trading using opposite Bank of America and National Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, National Retail 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 National Retail will offset losses from the drop in National Retail's long position.| Bank of America vs. RLJ Lodging Trust | Bank of America vs. Aquagold International | Bank of America vs. Stepstone Group | Bank of America vs. Morningstar Unconstrained Allocation |
| National Retail vs. Apple Inc | National Retail vs. Apple Inc | National Retail vs. Apple Inc | National Retail vs. Apple Inc |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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