Correlation Between Bank of America and Innovator MSCI
Can any of the company-specific risk be diversified away by investing in both Bank of America and Innovator MSCI 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 Innovator MSCI 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 Innovator MSCI Emerging, you can compare the effects of market volatilities on Bank of America and Innovator MSCI 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 Innovator MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Innovator MSCI.
Diversification Opportunities for Bank of America and Innovator MSCI
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and Innovator is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Innovator MSCI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator MSCI 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 Innovator MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator MSCI Emerging has no effect on the direction of Bank of America i.e., Bank of America and Innovator MSCI go up and down completely randomly.
Pair Corralation between Bank of America and Innovator MSCI
Considering the 90-day investment horizon Bank of America is expected to generate 2.61 times more return on investment than Innovator MSCI. However, Bank of America is 2.61 times more volatile than Innovator MSCI Emerging. It trades about 0.11 of its potential returns per unit of risk. Innovator MSCI Emerging is currently generating about 0.04 per unit of risk. If you would invest 3,918 in Bank of America on September 2, 2024 and sell it today you would earn a total of 833.00 from holding Bank of America or generate 21.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Innovator MSCI Emerging
Performance |
| Timeline |
| Bank of America |
| Innovator MSCI Emerging |
Bank of America and Innovator MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Innovator MSCI
The main advantage of trading using opposite Bank of America and Innovator MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Innovator MSCI 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 Innovator MSCI will offset losses from the drop in Innovator MSCI's long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Innovator MSCI vs. Innovator ETFs Trust | Innovator MSCI vs. First Trust Cboe | Innovator MSCI vs. Innovator SP 500 | Innovator MSCI vs. Innovator Equity Power |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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