Correlation Between Bank of America and PIMCO Enhanced
Can any of the company-specific risk be diversified away by investing in both Bank of America and PIMCO Enhanced 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 PIMCO Enhanced 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 PIMCO Enhanced Short, you can compare the effects of market volatilities on Bank of America and PIMCO Enhanced 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 PIMCO Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and PIMCO Enhanced.
Diversification Opportunities for Bank of America and PIMCO Enhanced
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and PIMCO is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and PIMCO Enhanced Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Enhanced Short 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 PIMCO Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Enhanced Short has no effect on the direction of Bank of America i.e., Bank of America and PIMCO Enhanced go up and down completely randomly.
Pair Corralation between Bank of America and PIMCO Enhanced
Considering the 90-day investment horizon Bank of America is expected to generate 22.53 times more return on investment than PIMCO Enhanced. However, Bank of America is 22.53 times more volatile than PIMCO Enhanced Short. It trades about 0.1 of its potential returns per unit of risk. PIMCO Enhanced Short is currently generating about 0.34 per unit of risk. If you would invest 3,009 in Bank of America on August 26, 2024 and sell it today you would earn a total of 1,691 from holding Bank of America or generate 56.2% 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. PIMCO Enhanced Short
Performance |
| Timeline |
| Bank of America |
| PIMCO Enhanced Short |
Bank of America and PIMCO Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and PIMCO Enhanced
The main advantage of trading using opposite Bank of America and PIMCO Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, PIMCO Enhanced 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 PIMCO Enhanced will offset losses from the drop in PIMCO Enhanced's long position.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| PIMCO Enhanced vs. Valued Advisers Trust | PIMCO Enhanced vs. Columbia Diversified Fixed | PIMCO Enhanced vs. Principal Exchange Traded Funds | PIMCO Enhanced vs. Doubleline Etf Trust |
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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