Correlation Between Bank of America and WisdomTree Emerging
Can any of the company-specific risk be diversified away by investing in both Bank of America and WisdomTree Emerging 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 WisdomTree Emerging 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 WisdomTree Emerging Markets, you can compare the effects of market volatilities on Bank of America and WisdomTree Emerging 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 WisdomTree Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and WisdomTree Emerging.
Diversification Opportunities for Bank of America and WisdomTree Emerging
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and WisdomTree is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and WisdomTree Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Emerging 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 WisdomTree Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Emerging has no effect on the direction of Bank of America i.e., Bank of America and WisdomTree Emerging go up and down completely randomly.
Pair Corralation between Bank of America and WisdomTree Emerging
Considering the 90-day investment horizon Bank of America is expected to generate 1.6 times more return on investment than WisdomTree Emerging. However, Bank of America is 1.6 times more volatile than WisdomTree Emerging Markets. It trades about -0.02 of its potential returns per unit of risk. WisdomTree Emerging Markets is currently generating about -0.07 per unit of risk. If you would invest 4,724 in Bank of America on October 25, 2024 and sell it today you would lose (56.00) from holding Bank of America or give up 1.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. WisdomTree Emerging Markets
Performance |
| Timeline |
| Bank of America |
| WisdomTree Emerging |
Bank of America and WisdomTree Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and WisdomTree Emerging
The main advantage of trading using opposite Bank of America and WisdomTree Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, WisdomTree Emerging 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 WisdomTree Emerging will offset losses from the drop in WisdomTree Emerging's long position.| Bank of America vs. JPMorgan Chase Co | Bank of America vs. Bank of America | Bank of America vs. RLJ Lodging Trust | Bank of America vs. PennyMac Finl Svcs |
| WisdomTree Emerging vs. WisdomTree SmallCap Quality | WisdomTree Emerging vs. WisdomTree Japan Hedged | WisdomTree Emerging vs. WisdomTree Interest Rate | WisdomTree Emerging vs. WisdomTree Emerging Markets |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |