Correlation Between Bank of America and Equitable
Can any of the company-specific risk be diversified away by investing in both Bank of America and Equitable 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 Equitable 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 Equitable Group, you can compare the effects of market volatilities on Bank of America and Equitable 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 Equitable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Equitable.
Diversification Opportunities for Bank of America and Equitable
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Equitable is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Equitable Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equitable Group 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 Equitable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equitable Group has no effect on the direction of Bank of America i.e., Bank of America and Equitable go up and down completely randomly.
Pair Corralation between Bank of America and Equitable
Considering the 90-day investment horizon Bank of America is expected to generate 0.8 times more return on investment than Equitable. However, Bank of America is 1.25 times less risky than Equitable. It trades about 0.1 of its potential returns per unit of risk. Equitable Group is currently generating about 0.02 per unit of risk. If you would invest 4,608 in Bank of America on November 8, 2024 and sell it today you would earn a total of 103.00 from holding Bank of America or generate 2.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Bank of America vs. Equitable Group
Performance |
| Timeline |
| Bank of America |
| Equitable Group |
Bank of America and Equitable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Equitable
The main advantage of trading using opposite Bank of America and Equitable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Equitable 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 Equitable will offset losses from the drop in Equitable's long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Canadian Imperial Bank | Bank of America vs. Bank of Montreal |
| Equitable vs. goeasy | Equitable vs. Canadian Western Bank | Equitable vs. TFI International | Equitable vs. Intact Financial |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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