Correlation Between Bank of America and Eventide Large
Can any of the company-specific risk be diversified away by investing in both Bank of America and Eventide Large 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 Eventide Large 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 Eventide Large Cap, you can compare the effects of market volatilities on Bank of America and Eventide Large 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 Eventide Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Eventide Large.
Diversification Opportunities for Bank of America and Eventide Large
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Eventide is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Eventide Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eventide Large Cap 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 Eventide Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eventide Large Cap has no effect on the direction of Bank of America i.e., Bank of America and Eventide Large go up and down completely randomly.
Pair Corralation between Bank of America and Eventide Large
Considering the 90-day investment horizon Bank of America is expected to generate 1.11 times less return on investment than Eventide Large. In addition to that, Bank of America is 1.68 times more volatile than Eventide Large Cap. It trades about 0.05 of its total potential returns per unit of risk. Eventide Large Cap is currently generating about 0.1 per unit of volatility. If you would invest 1,051 in Eventide Large Cap on August 26, 2024 and sell it today you would earn a total of 437.00 from holding Eventide Large Cap or generate 41.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 78.07% |
| Values | Daily Returns |
Bank of America vs. Eventide Large Cap
Performance |
| Timeline |
| Bank of America |
| Eventide Large Cap |
Bank of America and Eventide Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Eventide Large
The main advantage of trading using opposite Bank of America and Eventide Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Eventide Large 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 Eventide Large will offset losses from the drop in Eventide Large'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 |
| Eventide Large vs. Eventide Core Bond | Eventide Large vs. Eventide Multi Asset Income | Eventide Large vs. Eventide Healthcare Life | Eventide Large vs. Eventide Gilead |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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