Correlation Between Bank of America and Dunham High
Can any of the company-specific risk be diversified away by investing in both Bank of America and Dunham High 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 Dunham High 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 Dunham High Yield, you can compare the effects of market volatilities on Bank of America and Dunham High 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 Dunham High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Dunham High.
Diversification Opportunities for Bank of America and Dunham High
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Dunham is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Dunham High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham High Yield 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 Dunham High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham High Yield has no effect on the direction of Bank of America i.e., Bank of America and Dunham High go up and down completely randomly.
Pair Corralation between Bank of America and Dunham High
Considering the 90-day investment horizon Bank of America is expected to generate 6.39 times more return on investment than Dunham High. However, Bank of America is 6.39 times more volatile than Dunham High Yield. It trades about 0.1 of its potential returns per unit of risk. Dunham High Yield is currently generating about 0.18 per unit of risk. If you would invest 2,820 in Bank of America on August 31, 2024 and sell it today you would earn a total of 1,931 from holding Bank of America or generate 68.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Bank of America vs. Dunham High Yield
Performance |
| Timeline |
| Bank of America |
| Dunham High Yield |
Bank of America and Dunham High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Dunham High
The main advantage of trading using opposite Bank of America and Dunham High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Dunham High 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 Dunham High will offset losses from the drop in Dunham High'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 |
| Dunham High vs. Vanguard High Yield Corporate | Dunham High vs. Vanguard High Yield Porate | Dunham High vs. Blackrock Hi Yld | Dunham High vs. Blackrock High Yield |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |